XAU/USD Current price: USD 4,650
- The Middle East crisis keeps financial markets in risk-averse mode.
- The March US ISM Services PMI paints a bleak picture when read between the lines.
- XAU/USD under sellers’ control despite remaining at known levels.
On Monday, Spot Gold consolidates around $4,660, which is a tiny change on a daily basis but is lower compared to Friday’s close. Financial markets are in a frenzy at the start of the week, with sentiment swinging to the beat of headlines about the war in Iran.
The mood is changing, with headlines sometimes inspiring hope and others disbelief. A quick resolution to the Middle East crisis, however, appears unlikely as US President Donald Trump reiterated that Tuesday’s deadline had passed, adding that Iran’s latest proposal was not “good enough”.
The US dollar (USD) once again benefited from risk aversion and only fell temporarily after the release of US data. According to the Institute for Supply Management (ISM), the March Services Purchasing Managers’ Index (PMI) fell to 54, following February’s 56.1 and missing expectations of 55.
The report also showed that the Price Paid Index rose to 70.7 from 63 over the same period, reflecting rising inflationary pressures. The Employment Index also fell to 45.2 from 51.8 previously, indicating a weakening labor market.
The ISM Services PMI report in March painted a bleak picture of the US economy. Despite this, US indices maintain moderate gains throughout the day, preventing panic from taking hold and the dollar from rising sharply on the currency exchange.
XAU/USD Short-Term Technical Outlook
From a technical perspective, the short-term picture for the XAU/USD pair is slightly bearish. The 4-hour chart shows that price is moving further away from the recent $4,780 area and is currently holding below the rising 20-period uncomplicated moving average (SMA) around $4,686, signaling the upside momentum is fading in the still elevated range. The longer-term 100- and 200-period SMAs are also clustered above current levels near $4,673 and $4,916, respectively, and continue to decline, reflecting seller control. Finally, the Momentum Index dropped to negative territory while the Relative Strength Index (RSI) weakened back towards the 50 line, which collectively indicates that buying pressure has waned and that sellers are trying to gain short-term control.
On the daily chart, the XAU/USD pair has recorded a lower low and a lower high, which is a sign of increasing selling interest. The deviation is slightly bearish as price continues its decline below the 20-day SMA near $4,755 while also hovering around the rising 100-day SMA. Meanwhile, momentum remains well below 0 and continues to weaken in bearish control, while the RSI is hovering just below 45 after rebounding from the oversold area, suggesting that downside momentum is fading but not yet turning decisively in favor of buyers.
Immediate resistance appears at the short-term 20-period SMA near $4,686, with a sustained break above that level necessary to reopen the path towards the recent high at $4,787. A break through $4,787 would then expose the $4,820 zone where the previous supply could strengthen. On the other hand, initial support coincides with the recent reaction low at $4,610, and then $4,580 will be the next bear target if the weakness continues. A decisive drop below $4,580 would reinforce the bearish tone and could trigger a deeper pullback towards $4,550.
after 56.1 in February and no expectations(The technical analysis for this story was written with the lend a hand of an AI tool.)
