Gold Technical Analysis: Maintaining Recent Gains
The recent steep losses of the US dollar have been one of the main reasons for the rise in the price of gold to the level of $ 1,875 per ounce, near its highest since trading began in 2021.
Price settled around that high until the reaction of the US dollar was known in the minutes of the last Federal Reserve Bank meeting. At a time when the markets are waiting for the bank’s reaction to American inflation, which exceeds the bank’s objective in order to anticipate the date of the bank’s policy tightening, in particular with the American progress in terms of vaccination against the epidemic, until it comes to dropping the face hide. All recent statements from the bank’s policy makers indicate that the bank will not change its policy based on the latest numbers as it wants the numbers to remain stable for a longer period as well as continued strength in the labor market. American.
The US dollar DXY index is heading towards its lowest levels in several months as it risks a more pronounced collapse as Europe takes its first steps in the reopening process and outperforms risky currencies. Investor reactions to the minutes of the Federal Reserve’s meeting today, Wednesday, will be fundamental to the dollar’s close this week.
The dollar was sold off en masse ahead of the midweek session after European currencies were bought off heavily, putting the dollar index on course for a fourth straight session of decline, as price action plays a role. role against a backdrop of lukewarm decline in global bond yields and risk. gains in assets such as stocks and commodities.
On the economic front, UK employment data turned out to be stronger than expected for March, when the unemployment rate fell suddenly, with the figures released as the UK eased restrictions on supposedly non-essential businesses.
The dollar index is made up of 57% of the price of the euro against the dollar, so it is particularly sensitive to movements of the single European currency which behaved strongly before the middle of the week as the major European economies, including France and the United Kingdom have taken steps to reopen them. The US dollar rose sharply last week when US inflation surprised markets with a sharp rise more than expected, rising to 4.2% per year in April and more than double the Fed’s target level, supported by the The resulting rise in US bond yields, in a price action that halted the previous sell-off. This was caused by the April non-farm payroll report which surprised market expectations lower.
According to the technical analysis of gold: The price of gold could still maintain its recent gains until the reaction of the US dollar and the markets is known to the contents of the minutes of the last meeting of the US Federal Reserve later in the day, in particular with growing fears in the markets about the recent sharp rise in inflation in the United States. Gold price stability above the psychological resistance of $ 1,800 will remain favorable to controlling the performance of the bulls, given that recent successive gains have pushed technical indicators to saturated buying levels.
The closest resistance levels to gold are currently $ 1882, $ 1900, and $ 1915, respectively. This will be the first trend reversal as the price of gold moves towards the 1810 support level pushing it to the next highest support of $ 1785.