The Gold Spots (XAUUSD) opened the last week of April flat, following a first weekly decline of the month after recording a 1.07% slump last week. The strengthening US dollar underpinned the non-yielding bullion’s gains as investors shifted their focus towards the central bank’s meeting and speeches for clarity of a potential monetary policy path. The strengthening greenback subdues the commodity’s foreign demand as it becomes more expensive for foreign buyers to buy the dollar-denominated commodity.
The spot price’s losses were limited by the dip in the US Treasury yield during the morning trading session, with the US 2-year and 20-year Treasury Yields both 0.76% and 0.87% lower on Monday. The major central bank’s rate decision will continue driving the commodity’s movement in the short term, with the CME Fedwatch Tool reporting an 88.0% probability of a Fed rate hike in May, up from 85.2% a week ago.
Technical
The 4H chart shows that the precious yellow metal is trading within a wide ascending channel since the low achieved on the 22nd of March 2023. The spot price is currently trading flat around the 61.80% Fibonacci retracement level following the failure of the bears to sustainably push the move the price below.
The bears would look to a sustained move below the 61.80% Fibonacci retracement level and, potentially, a break below the lower trendline of the ascending channel for a bearish session for the precious yellow metal. A sustained break below the lower trendline could suggest increasing selling pressure and would bring the $1969.74/ounce and $1955.73/ounce support levels into play.
However, failure to sustainably move below the 61.80% Fibonacci retracement level would suggest a presence of buyers and would bring the immediate resistance at $1987.72/ounce into play. A break above the immediate resistance, supported by significant volume, would bring the 50.00% Fibonacci retracement level into play as bulls look to push the price towards the $2002.34/ounce resistance level.
Summary
The short-term momentum for the non-yielding bullion seems to be favouring the bears, and a sustained break below the golden ratio could help the bears’ charge towards the $1969.74/ounce support level, with the next focus being the $1955.73/ounce price level. On the upside, failing to break below the ascending channel would leave the $1987.72/ounce resistance level in play.
Sources: TradingView, Reuters,
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