Gold (XAU/USD) trades moderately higher on Wednesday and returns to the $4,370 area, after finding buyers near the $4,300 area on Tuesday.
A broad-based US Dollar weakness amid lower US yields ahead of the release of July’s Federal Reserve (Fed) monetary policy meeting is providing some support to precious metals, although the technical picture hints at fading bullish momentum
Analysts at OCBC agree that “gold’s rebound has lost some momentum as the renewed rise in oil prices added to pressure from higher long-end US yields,” with the move in both markets curbing the metal’s recent advance. Looking ahead, OCBC experts affirm that “for the gold rally to regain traction, oil and yields need to stabilise, or a stronger pickup from investment demand,” suggesting near-term performance will hinge on whether inflation-related drivers and investor flows turn more supportive. Technical Analysis: Tuesday’s bearish engulfing candle is a bearish sign XAU/USD trades at $4,367 at the time of writing after bouncing from $4,324.Tuesday’s bearish engulfing candle in the daily chart, however, is a bearish sign that hints at a potential trend shift.
Momentum indicators remain in bullish territory but highlight a waning impetus, with the Relative Strength Index (RSI) pulling back below 60 and the Moving Average Convergence Divergence (MACD) histogram showing contracting bars. On the downside, immediate support aligns with the August 14 low, at $4,311, followed by a broader demand area around $4,220 (June 22 high, August 6 low). Bullish attempts, on the other hand, are likely to face significant resistance at the area between the top of the last two weeks’ trading range, around $4,450, and the 200-day Simple Moving Average (SMA) at $4,510.