Gold Supported amidst Improved Sentiment, after another Rejection of Key Levels

XAU/USD Analysis

Markets are upbeat today as investors try to shake-off another risk-off week, helped partly by upbeat news from China. The country has started easing its Covid-19 lockdown, with Beijing authorities announcing today the return to workplaces and the resumption of dine-in services. ^[1]

Furthermore, we continue to see comments from US officials around potential lift-off of some of the Trump-era US tariffs against China. ^[2]. U.S. Commerce Secretary, Gina Raimondo said that the Biden administration is "looking at" such action, speaking on CNN's State of the Union on Sunday.

Today it was announced that UK Prime Minister Boris Johnson will face a vote of no-confidence, the outcome of which could potentially create movement in risk-flows and in Gold, while we will also be waiting to see in what mood NA traders will return form the weekend.

The US Dollar comes from a strong week, during which we saw hawkish comments by various officials, such Ms Mester on Friday after the solid US NFPs. Speaking on CNBC, the Cleveland Fed President noted that she "could easily be at 50 basis points in that meeting as well,". ^[3]

However, the greenback faces difficulties today, which supports XAU/USD. This can give Gold the chance to take another crack at the EMA200 and set fresh highs, but it does not inspire confidence at this stage for a larger rebound that will challenge the descending trendline from this year's high (at around 1,907).

However, XAU/USD had rejected the EMA200 again last week and lacks firm direction today, despite trading with positive undertone. So the technical outlook has not changed from out last analysis and the precious metal is vulnerable to new month lows (1,828), although a steeper decline that would bring the 2022 lows in the spotlight (1,786), will require strong catalyst.