Fundamental analysis of XAU/USD

Gold prices struggled with a strengthening dollar, and comments from Federal Reserve Chairman Jerome Powell signaled a more hawkish stance, leaving the precious metal near lows in the first half of March. The upward movement of the dollar index made gold relatively more expensive for holders of other currencies. At the same time, Powell's comments reinforced market expectations of higher interest rates, making gold less attractive as opportunity costs rose.

 Gold prices suffered as the U.S. dollar continued to rise to two-week highs. Powell's repeated references to the possibility of a rate hike at this year's European Central Bank (ECB) meeting fueled hawkish sentiment. In addition, European Central Bank Governor Christine Lagarde commented on inflation in the euro area over a potentially long period of time and Bank of England Governor Andrew Bailey's target rate proposal. Differences in central bank policies are putting pressure on gold. Expectations of interest rate hikes often act as a deterrent to investing in unprofitable assets such as gold. Market participants are also looking forward to future economic data, including U.S. unemployment benefits data, final first-quarter GDP data and personal consumption expenditures data. 

 Despite the strong headwinds, several factors may provide some support for the XAU/USD pair. Current global economic uncertainty combined with escalating tensions between the U.S. and China could make gold more attractive as a safe haven. Traders might also opt for a more cautious approach, limiting aggressive action until important data such as China's June PMI and PCE core price index in the U.S. are released. 

 Overall, gold is under significant pressure from a stronger dollar and hawkish signals from central banks, especially the Federal Reserve. While global economic concerns and geopolitical tensions may provide some respite, overall fundamentals seem to favor a bearish outlook for the XAU/USD pair in the near term. 

Technical analysis and scenarios:

The Alligator indicator shows that the instrument is in a downtrend as its jaw (blue line) is above the lips and teeth (green and red lines).

Main scenario (SELL)

Recommended entry level: 1890.00.

Take Profit : 1875.00.

Stop loss: 1905.00.

Alternative scenario (BUY)

Recommended entry level: 1917.00.

Take Profit: 1932.00.

Stop loss: 1905.00.