Financial markets are showing signs of increased stability following recent statements from Bank of Japan (BOJ) Governor Shinichi Uchida, yet the Federal Reserve’s future moves remain a key point of focus for investors. Spot gold (XAU/USD) is currently trading near the $2400 mark, specifically around 2400 Eur Usd equivalent when considering current exchange rates, but lacks a definitive direction.
Gold prices are hovering just below $2400, as the US Dollar takes a backseat in investor attention amid improved market sentiment. The Dollar’s performance is mixed across different currencies, showing strength only against the safe-haven Japanese Yen (JPY) and Swiss Franc (CHF). Meanwhile, XAU/USD is trading close to its opening price for the day, around $2,390.34.
Much of the market’s improved mood originates from Asia. BOJ Deputy Governor Shinichi Uchida indicated that the BOJ is unlikely to raise interest rates further if global markets remain unstable. This statement has dampened expectations of an imminent rate hike, which had previously fueled a surge in the Japanese Yen’s value after the BOJ’s recent 15 basis points (bps) rate increase. Following the initial rate hike, Governor Kazuo Ueda had mentioned that interest rates were still at a “very low” level, leading to speculation of further increases. Additionally, government bond yields have continued their weekly recovery after falling to multi-year lows earlier in the month.
On the economic data front, the calendar has been relatively quiet. Market participants are primarily focused on anticipating the next steps from central bank policymakers, particularly the US Federal Reserve (Fed). The Fed is currently under close scrutiny as recent macroeconomic data has sparked concerns about economic growth, leading to speculation that the central bank might consider cutting interest rates even before the scheduled monetary policy meeting in September.
Short-Term Technical Analysis for XAU/USD
In the current environment, gold is expected to maintain its strength, as uncertainty typically increases demand for this safe-haven asset. Analyzing the XAU/USD daily chart, technical indicators show a slight recovery, turning marginally upwards within neutral to negative territory. This suggests limited upward potential in the near future. Furthermore, the pair is trading below the 20-day Simple Moving Average (SMA), which is currently rising above the 38.2% Fibonacci retracement level of the June/July rally, positioned at $2,411.20. This level acts as immediate resistance. However, the longer-term moving averages are still trending upwards well below the current price, reinforcing a long-term bullish outlook.
Looking at the shorter-term, 4-hour chart, XAU/USD appears neutral. A bearish 20 SMA continues to trend downwards below the current price, having crossed below a flat 100 SMA. The 200 SMA is providing dynamic support around $2,385.00. Technical indicators have rebounded from recent lows but have flattened out within neutral levels, possibly indicating a lack of strong buying interest as XAU/USD remains just below their midlines.
Support Levels: 2,385.00 2,372.90 2,366.00
Resistance Levels: 2,411.20 2,424.10 2,438.80
