Gold added to last week’s strong gains and climbed to fresh three-month tops on Monday, albeit struggled to capitalize on the move. The 200-DMA at $1850 might cap XAU/USD ahead of US CPI on Wednesday, FXStreet’s Haresh Menghani briefs.
See – Gold Price Analysis: XAU/USD bulls come out of the shadows to mull a test of $1850 – DBS Bank
Technical levels to watch
“The downside, however, remains cushioned amid expectations for an uptick in US inflation – fueled by improving prospects for growth, plans for infrastructure spending and pandemic-related stimulus measures. Given that gold is considered a hedge against inflation, the market focus will remain on this week’s US CPI report.”
“The 200-day SMA is currently pegged near the $1,850 region, which should now act as a key pivotal point for short-term traders.”
“RSI (14) on the daily chart has now moved on the verge of breaking into the overbought territory. Hence, any subsequent positive move is more likely to confront stiff resistance and remain capped near the $1,873-75 region. That said, some follow-through buying should allow bulls traders to aim back to reclaim the $1,900 mark for the first time since January 8.”
“The $1,817-16 region now seems to protect the immediate downside. Any subsequent decline might be seen as a buying opportunity and remain limited near the $1,800 mark. That said, a convincing break below might prompt some aggressive technical selling and has the potential to drag the XAU/USD back towards a strong horizontal resistance breakpoint, now turned support near the $1,765-60 region.”