Gold: Fails to break $2056 region imply a correction ahead NFP

The meteoric rise propelled Gold (XAU/USD) to fresh all-time highs of $2055 on Wednesday and is now trading near that level, at $2050. Technical charts suggest upside could be limited and the yellow metal risks a correction but, overall, bias remains bullish as the dip-buying theme will continue, FXStreet’s Dhwani Mehta briefs.

Key quotes

“Disappointing US private sector ADP jobs report added to the concerns of a downbeat 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 gold 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.”

“As observed in the 4-hour 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-RSI divergence.”

“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.”