XAU/USD erased early gains, holds above $2,000

  • Tensions in the Middle East and a packed macroeconomic calendar spur caution.
  • Stock markets trade mixed as investors gear up for another round of earning reports.
  • XAU/USD lost momentum after an early rally, holds within familiar levels.

Gold price gapped higher at the weekly opening, with XAU/USD advancing up to $2,037.46 in the European session, as the US Dollar started the week with a soft tone. The latter, however, recovered at the beginning of the American session, with the pair now trading barely up on a daily basis.

Tensions arose in Asia after United States (US) President Joe Biden threatened to retaliate following a drone attack on US troops. Biden blamed Iran for the attack that resulted in three US service members killed and dozens of injured. “We had a tough day last night in the Middle East,” Biden noted, adding, “We shall respond.”

Stock markets trade mixed throughout the day, with Wall Street on the back foot at the beginning of the week. Still, activity is limited as investors focus on upcoming first-tier events, while the macroeconomic calendar was scarce on Monday. Investors await updates about the Eurozone and German Gross Domestic Product (GDP), US employment-related data including the Nonfarm Payrolls (NFP) report and the star of the week, the US Federal Reserve (Fed) monetary policy decision. Beyond the aforementioned releases, the focus will be on another batch of big-name earnings reports.

Trading boards are also being influenced by European Central Bank (ECB) officials’ comments. Following last week’s decision, policymakers are trying to cool down hopes for an April rate cut, which money markets are fully pricing in.

The daily chart for XAU/USD shows the pair holds on to modest intraday gains but remains below a bearish 20 Simple Moving Average (SMA).  At the same time, the longer moving averages lack directional strength well below the current level. Finally, technical indicators ticked marginally higher but remain within negative levels, not enough to support another leg north.

In the near term, and according to the 4-hour chart, XAU/USD is neutral. It briefly traded above the 200 SMA but quickly returned to its comfort zone. Al moving averages lack directional strength, reflecting persistent range-trading. Technical indicators, in the meantime, turned firmly south after reaching fresh peaks within positive levels, suggesting near-term buying interest is giving up.

Support levels: 2,019.20 2,010.00 2,001.60

Resistance levels: 2,033.10 2,040.30 2,052.60

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