Gold (XAU/USD) trades higher on Thursday and has reached session highs above $4,490, after bouncing from $4,425 lows earlier on the day.
The precious metal holds weekly losses, but investors’ optimism following news of a ceasefire between Israel and Lebanon has hurt the safe-haven US Dollar, providing a fresh impulse to precious metals The deal, still pending confirmation from Hezbollah, is expected to overcome one of the main obstacles to a durable peace agreement between the US and Iran
Oil prices and the US Dollar have gone through moderate declines following the agreement, although the ongoing hostilities in the area keep investors on edge On the macroeconomic front, US data has been Dollar-supportive this week, cushioning USD dips. ADP employment figures showed a larger-than-expected increase in net jobs in May, while the ISM Services Purchasing Managers’ Index highlighted solid business activity in the sector, combined with high inflationary pressures. The data fuel expectations that the Federal Reserve (Fed) will be forced to hike rates later in the year if price pressures remain high.
Technical Analysis: Gold is showing initial signs of a potential bullish correction XAU/USD has found support at the key 200-day simple moving average (SMA) on Thursday to pare previous losses. A daily close beyond $4,500 would confirm a bullish engulfing candle in the daily chart, a common sign of trend shifts, and give fresh hope for bulls. Momentum, however, remains soft, with the daily Relative Strength Index (RSI) hovering below the 50 line and the Moving Average Convergence Divergence (MACD) still in negative territory, hinting that upside attempts may struggle to gain strong traction in the near term.