Gold is trading at $1,990 as risk aversion reigns supreme in financial markets.
On Tuesday, financial markets were risk-averse. Allowing the US Dollar to rise throughout the European session. And then extend gains when Wall Street opened. Despite this, gold has found demand despite the gloom, with XAUUSD presently trading. At roughly $1,990 per troy ounce, up from an intraday low of $1,976.10.
Financial markets initially bought the dollar on news that major central banks will lower the frequency of their currency transactions with the Fed from daily to once per week beginning May 1 due to improved financial circumstances.
The European Central Bank (ECB), the Bank of Japan (BoJ), the Bank of England (BoE), and the Swiss National Bank (SNB) made the statement together. The stock market’s gentle tone also supported the US dollar gained additional traction following disappointing US statistics.
The gloomy tone in the American session is fueled by the dismal US CB Consumer Confidence.
The CB Consumer Confidence Index decreased to 101.3 in April from a revised 104.0 in March. The Present Situation Index rose to 151.1, while the Expectations Index fell to 68.1. Any number below 80 is interpreted as indicating a near-term recession.
Despite rising Treasury rates, the US Dollar remains strong across the board. The 10-year note presently yields 3.42%, a 9-basis point (bps) decrease, while the 2-year note yields 4.04%, a 10-bps decrease. A stronger US dollar keeps the XAUUSD from rising beyond $2,000.
Gold Technical Outlook
The XAUUSD pair found near-term buyers at the 23.6% Fibonacci retracement of the most recent daily increase between $1,809.38 and $2,048.67. Around $1,991.80 on the daily chart.
Furthermore, the 20 Simple Moving Average (SMA) is pointing in the same direction as the latter, strengthening the static resistance level. Simultaneously, the lengthier moving averages keep their upward slopes considerably below the present level.
Finally, the Momentum indicator has increased its slide and is now trading within negative territory, while the Relative Strength Index (RSI) is consolidating around 53. The danger of a bearish leg has grown, although the action will be viewed as corrective unless XAUUSD falls below $1,956.50.
The pair is neutral-to-bearish in the short term, according to the 4-hour chart. The XAUUSD pair is struggling to overcome a somewhat bearish 20 Simple Moving Average (SMA) is above it. While a directionless 100 SMA is below it.
Meanwhile, technical indicators have shifted moderately higher. But the Momentum is stuck around its 100 level, and the RSI remains in negative territory. Indicating minimal purchasing activity.
