XAU/USD: GOLD PRICES ARE CONSOLIDATING IN ANTICIPATION OF NEW DRIVERS FOR MOVEMENT

Current trend

The XAU/USD pair shows mixed trading dynamics, holding near 2320.00. Investors are awaiting the emergence of new drivers for growth, while the instrument is developing a weak technical correction, updating local lows from April 5 last Friday.

The American currency came under pressure after the publication of April data on the US labor market. Nonfarm Payrolls decreased from 315.0 thousand to 175.0 thousand, while analysts expected 243.0 thousand. Average Hourly Earnings slowed down from 4.1% to 3.9% in annual terms, confirming existing trends towards reducing inflation risks, and in monthly terms the indicator adjusted from 0.3% to 0.2%. Pressure on the dollar was also exerted by data on Services PMI from the Institute for Supply Management (ISM): the index dropped from 51.4 points to 49.4 points, with a forecast of 52.0 points.

Gold, in turn, is supported by persistent geopolitical risks in the Middle East. Negotiations between representatives of Israel and Hamas on a possible ceasefire appear to have failed, after which the Israeli army launched massive attacks on the city of Rafah. Also, the growth in demand for the precious metal is driven by expectations of lower borrowing costs from the world's leading central banks. The European Central Bank (ECB), from which markets expect changes in monetary policy during the June meeting, may be the first one to do so.

Meanwhile, the gold contract market is experiencing an uptrend. According to the report of the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in precious metal increased to 204.2 thousand from 202.9 thousand a week earlier. Investors are in no hurry to open new transactions, waiting for new, more stable drivers to determine subsequent dynamics. The balance of the "bulls" in positions secured by real money amounted to 192.173 thousand versus 25.034 thousand for the "bears". Last week, buyers reduced the number of contracts by 7.954 thousand, and sellers increased it by 1.064 thousand, marking a new stage in the stabilization of quotes.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is trying to reverse upwards and form a new buy signal (the histogram has to consolidate above the signal line). Stochastic is showing more active growth and currently indicates residual potential for an ultra-short-term "bullish" correction.

Resistance levels: 2336.50, 2353.79, 2375.00, 2400.00.

Support levels: 2320.00, 2300.00, 2285.00, 2265.52.

Trading tips

Short positions may be opened after a breakdown of 2320.00 with the target at 2285.00. Stop-loss — 2336.50. Implementation time: 2-3 days.

A rebound from 2320.00 as from support followed by a breakout of 2336.50 may become a signal for opening new long positions with the target at 2375.00. Stop-loss — 2320.00.