Gold Price Analysis: XAU/USD sees weekly closing below $1700 - a caution for bulls

The steady decline in Gold prices (futures on Comex) accelerated on Friday, as the rates closed the week below the 1700 mark for the first time in three weeks at 1688.35. A weekly closing below the key 1700 level is unlikely to bode well for the bulls.

On Friday, the yellow metal fell as much as 2% to reach a fresh six-week low of 1671.70, having booked a 4.5% weekly loss.

The corrective slide in the precious metal from seven-year highs of 1788.80 extended over the last week, mainly driven by the risk-on narrative, in light of the expectations of a faster economic rebound. This sent the global stock markets to fresh multi-month highs.

Bolstering the broader market optimism, the US Non-Farm Payrolls delivered a positive surprise, with the economy having unexpectedly added 2.5 million jobs while the country’s unemployment rate fell to 13.3%.

Therefore, investors shunned the safe-haven, gold, and sought higher-yielding/ risky assets such as stocks, Treasury yields etc. Further, the stronger US jobs report added legs to the US dollar’s recovery from three-month lows, which collaborated with gold’s weakness.

Despite the correction, the medium-term outlook for the metal remains bullish amid underlying US-China trade tensions. Moreover, the persistent pumping in off additional monetary and fiscal stimulus by global central bankers and governments, in an effort to ramp up economic growth, could likely keep the bulls hopeful.

Moving on, the next week offers the key US inflation figures and FOMC Interest Rate Decision, which will determine the near-term trading direction in the prices.

Gold: Technical levels to watch

The immediate support is seen at 1666.20 (April 21 low). A break below which 1657.46 (100-DMA) will be tested. The next resistances are aligned at 1700 (key psychological level), 1720.67 (5-DMA) and Friday highs of 1723.20.

Gold: Additional levels