Gold, the Chart of the Week: XAU/USD bulls lurking with eyes on trendline resistance
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get Premium without limits for only $9.99 for the first month
Access all our articles, insights, and analysts.
UNLOCK OFFER- Gold is running into a support zone that leaves upside corrections in focus for the initial balance of the week.
- The US Dollar is up high which also leaves a corrective bias for Gold price.
Gold price ended lower for a fifth-straight day on Friday as the market adjusted for higher for longer from the Federal Reserve due to evidence that the economy is running hot. Gold price fell from trendline resistance mid-week and extended the losses to a fresh cycle low of $1,809 while US Bond yields also climbed.
The US 10-year note yield reached a high of 3.978% and ended the day paying 3.947%, up from the day's low of 3.854%. The US Dollar index reached a high of 105.32 and ended the day up high after Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation measure, rose by an annualized 5.4% in January, up from 5.3% in December and ahead of a 4.9% consensus estimate.
All in all, this leaves the outlook data dependent and markets will need to wait for the Nonfarm Payrolls report a little longer than this week as it falls on the 2nd Friday of this month. Instead, ISM surveys will be on the watchlist for this week and data already released point to a rebound for the ISM mfg index in Feb following five months of consecutive declines that saw the series drop to a post-Covid low of 47.4 in Jan, analysts at TD Securities said. ''Separately, we look for the ISM services index to stabilize around its current level after the notable Dec-Jan zigzag in the series. We might revise our projection as more data is released next week.''
Gold and DXY technical analysis
The US Dollar is up high and a correction would be anticipated for the initial balance to start the week.
This puts the focus on the upside for the Gold price to revisit prior support and test the trendline resistance as illustrated o the above 4-hour charts.
- Gold is running into a support zone that leaves upside corrections in focus for the initial balance of the week.
- The US Dollar is up high which also leaves a corrective bias for Gold price.
Gold price ended lower for a fifth-straight day on Friday as the market adjusted for higher for longer from the Federal Reserve due to evidence that the economy is running hot. Gold price fell from trendline resistance mid-week and extended the losses to a fresh cycle low of $1,809 while US Bond yields also climbed.
The US 10-year note yield reached a high of 3.978% and ended the day paying 3.947%, up from the day's low of 3.854%. The US Dollar index reached a high of 105.32 and ended the day up high after Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation measure, rose by an annualized 5.4% in January, up from 5.3% in December and ahead of a 4.9% consensus estimate.
All in all, this leaves the outlook data dependent and markets will need to wait for the Nonfarm Payrolls report a little longer than this week as it falls on the 2nd Friday of this month. Instead, ISM surveys will be on the watchlist for this week and data already released point to a rebound for the ISM mfg index in Feb following five months of consecutive declines that saw the series drop to a post-Covid low of 47.4 in Jan, analysts at TD Securities said. ''Separately, we look for the ISM services index to stabilize around its current level after the notable Dec-Jan zigzag in the series. We might revise our projection as more data is released next week.''
Gold and DXY technical analysis
The US Dollar is up high and a correction would be anticipated for the initial balance to start the week.
This puts the focus on the upside for the Gold price to revisit prior support and test the trendline resistance as illustrated o the above 4-hour charts.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.