Gold records a fresh two-week high at around $1860s

The Gold Index advances for the fourth successive trading day and begins the trading week with an upbeat tone but retreats at the 20-day moving average (DMA) at $1856.45. The XAU/USD Index reflects the weak appetite for the US dollar, despite higher US Treasury yields, which are pairing last Friday’s losses.

The market sentiment remains upbeat, one of the factors that weighed on the US Dollar, which is trading at four-week lows. The US Dollar Index is plunging almost 1% and clings to the 102.000 mark, a tailwind for gold prices. The dollar’s weakness is a mirror of growing concerns of a US economic slowdown that could trigger a recession, as the Fed hikes rates aggressively to bring inflation under control from above 8%. Investors’ focus would be on Friday’s Personal Consumption Expenditure, the US Fed’s favorite gauge of inflation

US equities are higher as the New York session begins to wind down, though they remain at risk of resuming the ongoing bear market correction. That would carry on towards the Asian session, which could witness the second straight session with a positive appetite. Reports that the US may consider lifting some trade tariffs on China was a piece of news cheered by traders, which turned to equities and lifted the major global indices.

Atlanta’s Federal Reserve President Raphael Bostic said that the quick response in financial markets to tighten monetary policy offers hope that other parts of the economy may adjust more quickly. On Monday, XAU/USD began its week of trading, just shy of the R1 daily pivot around $1858, and rallied towards the daily high at $1865.34, $25 short from testing March lows at around $1889.91. Additionally, once the daily high was reached, the yellow metal retreated below the 20-day moving average (DMA), and it is settling around the $1850 area.

Technically; the Gold Index is neutral biased once traders lifted the non-yielding metal above the 200-DMA at $1838.97, opening the door for further gains. However, although Gold is rallying for the fourth consecutive day, it remains exposed to further selling pressure. At the time of writing, the daily chart shows that XAU/USD bulls failed to reclaim the 20-DMA at $1856.46, a level that, once conquered, could open the door for a re-test of March’s low at around $1889.91.

If that scenario materializes, the first resistance would be the 100-DMA at $1886.33. Break above would expose March’s low at $1889.91, followed by the $1900. Mark. On the flip side, XAU/USD’s first support would be the 200-DMA at 1838.97. Once cleared, the next support would be $1800, followed by the YTD low at $1780.18.