Gold Price Analysis: XAU/USD bulls seeking continuation in dollar weakness

  • Gold is supported on the daily 10 EMA.
  • The 61.8% Fibo aligns with prior highs of 1,758 that guards 1,739.69.
  • US dollar is in focus, bears looking to fade. 

Gold was trading in a tight range on Friday and it had travelled between a low of $1,764.31 to a high of $1,773.74 to end flat on the day following a late afternoon recovery. 

It is starting out the week in holiday thin markets flat and idles $1,769.

A focus for the week ahead is in the short dollar position which also relatively high, so profit-taking ahead of this week’s jobs data on Friday could be the theme.  

The DXY rallied some 0.7% on the day from 90.5910 to a high of 91.3229 on Friday to end down 2.1% for the month of April, its largest monthly loss since December.

Meanwhile, a developing trend of firmer-than-expected economic data, higher commodity prices amid supply disruptions as well as huge fiscal and monetary policy support is raising inflation tail risk.

The jobs data will be critical in this respect but so too will be January Consumer Price Index data Wednesday.

Headline inflation is expected to rise a tick to 1.5% YoY, while core is expected to fall a tick to 1.5% YoY.  

Also, Fed Chair Powell speaks to the Economic Club of New York Wednesday. 

”Looking ahead, no further talk of tapering from the Fed and more talk of big stimulus from Treasury is likely to continue weighing on the dollar and so we can’t sound the all-clear just yet. That said, we are becoming increasingly confident that the dollar bottoms in Q1,” analysts at Brown Brothers Harriman explained. 

Gold technical analysis

Chart of the Week: Gold price analysis, a bearish bias persists

The rising 20-day EMA has been important in the case of the bulls which is offering support.

Gold, however, slipped to below prior supporting daily closes and has now formed a new resistance structure. A break of which will likely see a daily extension.

Meanwhile, a failure below the support will open prospects for a deeper retracement of the daily bullish impulse.

The 61.8% Fibo aligns with prior highs of 1,758 that guards 1,739.69.

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