Gold prices advanced on Tuesday, reversing some of Monday's losses. The dollar weakened across the board during the New York session, weighed by lower U.S. yields as investors brace for the major central banks' interest rate decisions.
At the time of writing, the spot price, XAU/USD, is trading at $1,655 an ounce, 0.29% above its opening price. Still and despite the positive outcome, XAU/USD has posted a lower low and a lower high on Tuesday.
Meanwhile, investors' focus is now on the following interest rate decisions scheduled for this week and the next. The Bank of Canada, the European Central Bank, the Bank of England, and the Federal Reserve, among others, will meet.
For the ECB's decision on Thursday, investors expect another 75 bps hike announcement. For the Fed meeting on Nov. 2, a fourth consecutive 75 bps increase is already priced in, while for the BoE's decision the following day, investors are expecting a 100 bps hike.
Meanwhile, the U.S. dollar, measured by the DXY index, lost the 111.00 level and faced severe selling pressure after disappointing U.S. data. The Federal Housing Agency reported housing prices retreated 0.7% in August, while the CB Consumer Confidence Index fell to 102.5 in October. Furthermore, the Richmond Fed Manufacturing Index plunged to -10 in the same month.
The yellow metal benefited from recession fears as the real economy is suffering from the tighter financial conditions imposed by the Fed. In addition, the U.S. Q3 GDP reading on Thursday could also impact gold prices.
From a technical view, the XAU/USD short-term outlook remains neutral to slightly bearish as the price remains below the main moving averages. At the same time, indicators stay on the negative ground. The RSI has gained an upward slope but remains below its midline, while the MACD seems poised to cross into positive territory.
On the upside, the next resistances are seen at the 20-day SMA, currently around $1,670, followed by $1,685 and the $1,700 psychological level. On the downside, the next support could be found at the daily low of $1,638, followed by the $1,620 area, and then the cycle low of $1,614, struck on Sept. 28.