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


  • Gold sold-off into economic rebound narrative after US NFP surprise.
  • US-China tensions, global coronavirus massive stimulus to offer support.
  • Focus on US inflation data and FOMC Interest Rate decision next week.   

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

XAU/USD

Overview
Today last price 1688.3
Today Daily Change 0.00
Today Daily Change % 0.00
Today daily open 1685.13
 
Trends
Daily SMA20 1722.01
Daily SMA50 1697.49
Daily SMA100 1642.4
Daily SMA200 1569.59
 
Levels
Previous Daily High 1716.59
Previous Daily Low 1670.76
Previous Weekly High 1745.12
Previous Weekly Low 1670.76
Previous Monthly High 1765.38
Previous Monthly Low 1670.72
Daily Fibonacci 38.2% 1688.27
Daily Fibonacci 61.8% 1699.08
Daily Pivot Point S1 1665.06
Daily Pivot Point S2 1645
Daily Pivot Point S3 1619.23
Daily Pivot Point R1 1710.89
Daily Pivot Point R2 1736.66
Daily Pivot Point R3 1756.72

 

 

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