Uncertainty Lies Ahead for XAU/USD

Gold’s fundamental backdrop may change as we head into the second quarter of 2023 with a less hawkish Fed. However, calling out the dovish Fed may be too early to call out other economic factors that are creating a push/pull effect for the US central back, making their job more difficult to stabilize prices.

XAU/USD Technical Analysis

Spot gold weekly chart

Infographic by Warren Venketas, IG

Looking at the longer-term weekly chart of gold, the 1950.00 resistance handle (now support) has been breached for the second time this year. With more conviction in this tie round, a rally towards 2070 2075 area (in green) is not excluded. If we look at the RSI, there are signs of bearish divergence and that could indicate a possible move lower as price action and the RSI extend their opposite flights. Although there is an initial move up, by the end of the second quarter there may be a pullback towards 1950 and beyond. The 50-day (yellow) and 200-day (blue) moving averages are quietly converging and may form a death cross in due course, once again exposing XAU/USD for further decline.

Spot gold daily chart

Infographic by Warren Venketas, IG

Focusing on the daily chart above, the short-term bias is still in favor of the bears on gold with the RSI in the overbought territory. The difficulty is forecasting over a 3-month period and with so much impactful economic data coming in, the long-term outlook can be murky. Periodically reviewing the above technical analysis will ensure a fresh look when new data hits the market, giving a more accurate view. I would have to see my personal opinion that gold continues between 1900-2100 areas leaving Q3 with potential to move the needle in a more significant way.

Key resistance levels:

-2070.00 – 2075.00

-2009.75

-2000.00

Key support levels:

-1950.00

1937.31

-1900.00

-1885.83 / 50-day simple moving average

Direction support

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