XAU/USD Stumbles as Risk-on Sentiment Returns

Gold (XAU/USD) price outlook:

• Gold prices turn cautious amid easing fears of banking contagion
• XAU/USD Threatens support at the February 2023 high
• US Dollar gains, dragging safe-havens lower

Gold futures ease after a brief return of risk appetite

Gold prices are trading lower after the US Dollar managed to regain confidence, pushing risk assets higher. With the US Dollar gaining a portion of recent losses, safe havens dipped, driving precious metals lower.

Although fears of contagion in the banking sector appeared to have eased, the stability of the US banking system remains unknown. However, after a temporary retest of $2,000, gold futures pulled-back, falling below the February high, currently providing resistance at $1,975.2.

With an array of high-impact economic data releases contributing to risk-appetite, technical levels have provided an additional catalyst for price action.

Gold (XAU/USD) Technical Analysis

As XAU/USD continues to trade well-above the 50-day moving average (MA), bulls appear to be losing steam. With front-month futures currently trading below the yearly high, a broader range of support has formed around the key psychological level of $1,950.

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As the barrier of support of resistance currently remains intact, gold futures remain vulnerable to developments in the US economy.

XAU/USD (Gold) futures Daily Chart

Chart prepared by Tammy Da Costa using TradingView

For the remainder of the weak, the economic calendar could either threaten or boost expectations for the US economy.

With GDP, Core PCE and Michigan sentiment still on tap, safe-haven assets could continue to trade with limited motion until the underlying trend is confirmed.

DailyFX Economic Calendar

Gold Sentiment

At the time of writing, Gold: Retail trader data shows 61.00% of traders are net-long with the ratio of traders long to short at 1.56 to 1.The number of traders net-long is 5.36% higher than yesterday and 8.33% higher from last week, while the number of traders net-short is 2.16% lower than yesterday and 5.83% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.

Gold Price Levels to Watch

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707