Gold Price Analysis: XAU/USD eyes test of 21DMA in $1840s


  • Spot gold prices have thus far failed to push convincingly back into the $1840s but are sharply up from lows.
  • Bulls now eye a move towards the 21-day moving average which currently resides at $1842.
  • US Treasury Secretary Janet Yellen’s will give a testimony at Capitol Hill on Tuesday which could trigger volatility.

Spot gold prices (XAU/USD) have thus far failed to push convincingly back into the $1840s on Monday, though in fairness the metal is sharply up from Asia Pacific session lows just above $1800; shortly after the reopening of Monday trade in Asia, a mini-flash crash appears to have taken place, offering gold bulls a great opportunity to get long the precious metal as low as $1803. At present, the precious metal trades just below the $1840 mark, up roughly 0.7% or just over $12 on the day, as trade volumes drop off as European traders head for the exit and no US participants on account of US markets being closed for Martin Luthar King Junior Day.

Bulls now eye a move towards the 21-day moving average which currently resides at $1842 and then potentially back towards last week's highs around the $1860 mark. Further upside to these levels might be a struggle is USD continues to climb higher, however.

Driving the week

Precious metals traders ought to be keeping an eye, then, on how key US dollar drivers this week go, including incoming US Treasury Secretary Janet Yellen’s testimony to Congress goes on Tuesday and on how incoming US President Joe Biden’s inauguration on Thursday goes. The outlook for US fiscal will be the most important topic now that the Fed is in blackout ahead of the month-end policy meeting, as will the state of the global pandemic (do Covid-19 cases continue to rise in China? How do vaccinations go?).

Eyes should also remain firmly on what happens with US real yields and inflation expectations (derived from the difference between real and nominal yields); US bond markets are closed this Monday, but will reopen as usual tomorrow, providing further impetus for precious metals traders.

Yellen’s testimony

US Treasury Secretary Janet Yellen will give testimony at Capitol Hill on Tuesday; the former Chairman of the US Federal Reserve is expected to make it clear that the USA will not seek to purposely weaken the US dollar. According to the Wall Street Journal, Yellen will say that “the value of the U.S. dollar and other currencies should be determined by markets. Markets adjust to reflect variations in economic performance and generally facilitate adjustments in the global economy” if asked about the incoming administration's dollar policy.

Any departure from such a policy could trigger some volatility in USD and in precious metals markets. However, calls for a weaker USD does not mean getting a weaker USD; outgoing US President Donald Trump spent much of the last four years calling for a weak USD to help US exporters but failed to get until right at the end of his term, and that was only to do with the Fed’s actions to combat the pandemic. His protectionist trade policies and fondness of fiscal stimulus were seen as a USD positive combination at the time.

Bank of Singapore analyst Moh Siong Sim notes that Yellen “is kind of signaling a hands-off approach, which is reverting to what had traditionally been the case before Trump… I think the dollar and financial markets will be less of a focus, in terms of verbal rhetoric, for the Treasury secretary and the key focus will be getting policy implemented in terms of fiscal relief”.

Spot gold key levels

XAU/USD

Overview
Today last price 1838.22
Today Daily Change 12.48
Today Daily Change % 0.68
Today daily open 1825.74
 
Trends
Daily SMA20 1880.49
Daily SMA50 1861.23
Daily SMA100 1887.48
Daily SMA200 1844.14
 
Levels
Previous Daily High 1857.02
Previous Daily Low 1823.4
Previous Weekly High 1863.83
Previous Weekly Low 1816.96
Previous Monthly High 1906.87
Previous Monthly Low 1775.52
Daily Fibonacci 38.2% 1836.24
Daily Fibonacci 61.8% 1844.18
Daily Pivot Point S1 1813.75
Daily Pivot Point S2 1801.77
Daily Pivot Point S3 1780.13
Daily Pivot Point R1 1847.37
Daily Pivot Point R2 1869.01
Daily Pivot Point R3 1880.99

 

 

Share: Feed news

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stabilizes above 1.0900 ahead of Powell speech

EUR/USD stabilizes above 1.0900 ahead of Powell speech

EUR/USD fluctuates slightly above 1.0900 after erasing the bearish opening gap. The positive opening in Wall Street makes it difficult for the US Dollar to gather strength and helps the pair hold its ground ahead of Fed Chairman Powell's speech at the Economic Club of Washington.

EUR/USD News

GBP/USD struggles to clear 1.3000, eyes on Fed Chairman Powell

GBP/USD struggles to clear 1.3000, eyes on Fed Chairman Powell

GBP/USD finds it difficult to build on the previous week's gains and trades below 1.3000 on Monday. Investors refrain from taking large positions ahead of Fed Chairman Powell's speech and allow the pair to stay in its daily range.

GBP/USD News

Gold on its route to retest record highs at $2,450

Gold on its route to retest record highs at $2,450

Gold regains its traction and trades in positive territory slightly above $2,420 after dropping toward $2,400 at the beginning of the week. Investors await Fed Chairman Powell's appearance at the Economic Club of Washington.

Gold News

Crypto Today: Bitcoin, Ethereum and XRP what to expect as SEC executive says Howey test applies to cryptos

Crypto Today: Bitcoin, Ethereum and XRP what to expect as SEC executive says Howey test applies to cryptos

Bitcoin trades above $62,500 on Monday, sustains above key support as head of US SEC enforcement division says Howey test applies to cryptos. Ethereum and XRP trade above key support, extending gains by nearly 3% on the day. 

Read more

Five fundamentals for the week: Markets set to move on Trump fallout, ECB, US Retail Sales, more Premium

Five fundamentals for the week: Markets set to move on Trump fallout, ECB, US Retail Sales, more

"Donald Trump was shot" – the shocking reports from Pennsylvania reverberated across markets and will likely continue doing so. Investors will also watch for further signs of slowdown and European defiance. Here are the three key events to watch.

Read more

Forex MAJORS

Cryptocurrencies

Signatures