- Technical charts suggest upside could be limited, risks correction.
- Overall bias remains bullish, as the dip-buying theme will continue.
- US stimulus hopes, a weaker dollar and US-China tensions underpin.
- Focus shifts to the critical US NFP after disappointing ADP report.
The meteoric rise propelled Gold (XAU/USD) to fresh all-time highs of $2055 on Wednesday, as investors continued to find value in the bullion amid the US dollar meltdown and record low real Treasury yields. Disappointing US private sector ADP jobs report added to the concerns of a downbeat Non-Farm Payrolls (NFP) report due this Friday and exacerbated the pain in the buck. Meanwhile, expectations of US stimulus deadlock likely to be overcome soon also boosted the yellow metal. The haven demand for the metal was buoyed by the continued surge in the coronavirus cases globally, with over an 18.66 million tally reported a day. The virus fears continue to temper the economic rebound expectations.
Looking ahead, the yellow metal will remain at the mercy of the US dollar dynamics and fiscal stimulus negotiations. Investors await the Bank of England (BOE) monetary policy decision, with any hints on further stimulus, by way of QE expansion or negative interest rates, will likely benefit the non-yielding gold. Also, the US Jobless Claims could have a significant impact on the gold trades, as all eyes remain on the US NFP.
Short-term technical perspective
Gold: 4-hour chart
As observed in the four-hour (4H) chart, XAU/USD faced rejection on a few occasions at the two-week-long rising channel resistance near $2056 region. Therefore, a correction looks likely on the cards, as also suggested by the bearish price-Relative Strength Index (RSI) divergence.
In addition, the daily RSI is highly overbought and thus, backing the case for pullbacks. However, the overall bias remains bullish and therefore, every dip in the bright metal is likely to be bought in and spot could retest the record highs. The bullish bias remains intact as long as the spot holds above the 21-4H Simple Moving Average (SMA) at $2001.
Gold: Additional levels to consider
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.