XAU/USD Current price: $5,074
- Japan’s election boosted demand for the JPY, thereby eroding demand for the US Dollar.
- The United States will release first-tier employment and inflation data this week.
- XAU/USD turned bullish in the near term, and could slowly but steadily return to record highs.
Spot Gold extends its Friday’s momentum at the beginning of the new week, and trades around $5,070 a troy ounce in the American session. The bright metal takes advantage of broad weakness in the US Dollar (USD) and gains ground despite a generally optimistic market mood.
The USD decline started in Asia and resulted from the Japanese Yen (JPY) strength after the outcome of local elections. Prime Minister (PM) Sanae Takaichi called for a snap election last month, seeking increased support for her policies. The result was beyond any expectation as the Liberal Democratic Party (LDP) secured 316 out of 465 seats in the lower house, the first time a party won two-thirds of the house since the parliament was established.
Other than that, financial markets had little to work with. Investors are waiting for the United States (US) data. Following the brief partial government shutdown, the country will publish the January Nonfarm Payrolls (NFP) report on Wednesday, and Consumer Price Index (CPI) figures on Friday.
XAU/USD short-term technical outlook
Spot Gold appears to be recovering its bullish poise after bottoming at around $4,400 early in February. Last week’s peak at around $5,092 stands as an immediate barrier, yet once beyond it, XAU/USD is likely to grind back toward record highs.
From a technical perspective, readings in the 4-hour chart support the bullish case. The pair has advanced above a bullish 20-period Simple Moving Average (SMA), which has turned higher right below a flat 100-period SMA. The 100 SMA provides support at $4,954, followed by the 20 SMA at $4,928. At the same time, technical indicators accelerated north within positive levels, in line with increased buying interest.
In the daily chart, XAU/USD managed to firm up above all bullish moving averages. The 20-day SMA accelerated north, currently standing at around $4,890. Meanwhile, the Momentum indicator has partially lost its upward strength but holds well above its midline, while the Relative Strength Index (RSI) indicator advances at around 59, favoring the upside without confirming another leg north.
(The technical analysis of this story was written with the help of an AI tool.)
