Gold Price Analysis: XAU/USD bears stepping in at a critical resistance zone


  • Gold meets resistance and there are prospects of a significant correction. 
  • US dollar pressured by falling US Treasury yields. 

Gold prices were elevated again on Thursday as the US dollar dipped to a fresh low on the back of sliding US yields. 

At the time of writing, XAU/USD is trading at $1,754.55 having popped from a low of $1,733.26 to a high of $1,758.72 on the day.

US Treasury yields were losing ground again due to the fresh dovish comments from Federal Reserve Chair Jerome Powell.

Also, worse-than-expected initial jobless claims that highlighted the economy's bumpy recovery from the pandemic threw cold water over the US dollar's bullish performance of late. 

The data showed that initial claims for state unemployment benefits totalled a seasonally adjusted 744,000 for the week ended April 3, compared with 728,000 in the prior week. Continued unemployment claims though fell to 3.73 million for the week of March 27.

Meanwhile, at an International Monetary Fund event on Thursday, Fed's Powell said a surge in spending as the US economy reopens, along with bottlenecks in supply, will likely push prices higher this year, but would not result in the kind of yearly price increases that would constitute inflation.

The 10-year US Treasury yield dropped to a fresh low of 1.6280% and was ending on Wall Street down some 2.64%. 

Fed's Powell's remarks followed the cautious Federal Open Market Committee minutes on the March policy meeting released on Wednesday whereby various participants noted that changes in the path of policy should be based primarily on observed outcomes rather than forecasts. 

Gold technical analysis

In the above daily chart, the price is now testing a critical resistance area and has developed a new support structure. 

A close above the support today opens the prospects of a higher high, but the price could well find its self consolidating in coming sessions and trapped between resistance and support. 

From a 4-hour perspective, there are prospects of a 50% mean reversion to prior resistance as follows:

 

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.

Feed news

Get Weekly Crypto trade ideas!  
Empower yourself with the best market insights

Join FXStreet Premium!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD retains weekly gains trades above 1.2000

EUR/USD peaked at 1.2079, now stable in the 1.2030 region. The shared currency holds on to recent gains despite renewed demand for its American rival.

EUR/USD News

GBP/USD retreats from 1.40 despite upbeat UK job figures

GBP/USD is extending its falls after retreating from 1.40 as the dollar edges higher. Earlier, the UK reported a drop in the unemployment rate to 4.9%, better than expected. The Claimant Count Change also beat estimates with 10.1K. 

GBP/USD News

XAU/USD clings to modest gains around $1,780 despite USD strength

The XAU/USD gained traction in the early American session and climbed to a daily high of $1,780. Although the greenback started to gather strength in the second half of the day, the pair stayed relatively resilient and was last seen rising 0.35% on the day at $1,778.

Gold News

WeWork and Venmo join the Bitcoin craze while prices consolidate

The announcement by WeWork that it will begin accepting payments in select cryptocurrencies, including Bitcoin, Ethereum, USD Coin, Paxos, and several others, is another sign of adoption and follows the decision by Tesla to do the same

Read more

Bank of Canada Preview: Dovish surprise to lift USD/CAD

The Bank of Canada is widely expected to keep its policy rate unchanged at 0.25% on Wednesday. However, the improving economic outlook and recent remarks from officials suggest that the BoC could become the first major central bank to lay out a roadmap out of the ultra-loose policy.

Read more

Forex MAJORS

Cryptocurrencies

Signatures