Where Did You Gold? – Gold Bulls Must Overcome Key Resistance to Remain on The Scene

Gold has failed to keep its momentum from Friday when it shot up pas $1,789.90. At the time of writing, the price is currently at $1,783.80 and trading above its 50-day Simple Moving Average (SMA). However, a bearish trend is presently reflected in the Moving Average Convergence Divergence (MACD) while the Relative Strength Index (RSI) has since dipped from an overbought condition to its current reading of 52. The current price of spot gold is $1,796.06. 

Source: Yahoo Finance

Omkar Godbole, an analyst from FX Street, believes that the bulls can once again conquer the scene if it successfully overcomes a key resistance of $1,792, which is the hourly chart inverse head-and-shoulders neckline. Meanwhile, on the opposite end, a key support level lies at $1,760.

Let’s take a look at the broader market. Last week, the U.S. retail sales for January came in well above forecast, while both the January Services and Manufacturing Purchasing Managers’ Index (PMI) also showed expansion. The results contributed to the strengthening of the USD last week, which did not fare well for gold, the greenback’s nemesis.

For this week, the release of the U.S. gross domestic product (GDP) data would be closely watched. The chairman of the U.S. Federal Reserve (Fed), Jerome Powell, is also scheduled to appear before the U.S. House and Senate committees for a discussion on the economy and monetary policy. Whether a dovish or hawkish sentiment is picked up from these discussions could then affect the market sentiment. Positive outcomes from both of these could support the USD’s rally, which would be detrimental to the tracks of the gold bulls. 

XAU/USD (as of Feb 22, 2021, 10.50 a.m., GMT +8) - $1,783.80

FOLLOWME XAU/USD User Sentiment (as of Feb 22, 2021 at 11.30 a.m.)

Short – 46.17%

Long – 53.83%