XAUUSD trades above 21-SMA amid geopolitical tensions

Gold is showing strong resiliency despite the slightly higher-than-expected CPI reading posted last Thursday.

After dipping to fresh weekly lows at ~$2013, XAUUSD bulls have managed to reiterate and bring the price back above the $2045 level.

Higher inflation reading rekindled fears that the Fed may postpone the highly anticipated rate cuts.

A continuation of the hawkish stance by the Fed may cause the zero-yielding gold to depreciate as Investors would be more attracted towards dollar-denominated assets such as Bonds.

However, it may be too early to jump to definite conclusions.

• The uncertainty regarding geopolitical and global economic stability could still drive investors towards the safe heaven asset
   
• Recent rise in inflation was mainly due to rising shelter costs which are expected to decline through this year
   
• The market still implies a 66.3% chance of a rate cut in March

From the technical perspective…

• XAUUSD price may consolidate within $2020-$2050 range as Investors grasp for clues regarding the future of the US interest rates
   
• 21-period SMA at $2042.28 may prove to be a strong resistance level while to the downside the 50-period SMA is set to provide support at $2014.43
   
• The $2020 round number may also provide support if the bears manage to regain the initiative
   
• The Relative Strength Index (RSI) positioning (at 52.71) underlines the market’s current state of uncertainty