Daily Brief, Apr 22: Everything You Need to Know to Trade Gold - Forex News by FX Leaders

Daily Brief, Apr 22: Everything You Need to Know to Trade Gold

Posted Wednesday, April 22, 2020 by
Arslan Butt • 2 min read

Good morning, traders.

On Wednesday, the precious metal gold prices crawled lower as a robust dollar and run for cash following historic losses in US crude oil futures subdued the appetite for the safe haven asset. GOLD prices traded bullish by 0.2% at $1,683.08 per ounce, after reaching a near two-week low on Tuesday as the oil loss triggered a panic sell-off in broader markets, stoking a dash for liquidity.

The precious metal edged higher from a more than one-week low hit earlier, helped by dwindling share markets as US crude prices plunged and concerns about coronavirus-linked economic damage persisted. The reason behind the fresh risk-off market sentiment is the rise in the coronavirus (COVID-19) driven deaths in the US and the UK. The US President Donald Trump’s indirect attack on China’s struggles to stop the coronavirus outbreak also boosted the risk-off sentiment.
US President Donald Trump suggested that approximately 20 states were ready to re-open while also showing a willingness to sign the bill that stops immigration into the US for 60 days. As a result, the risk sentiment remains under pressure.

The reason behind the risk-off market sentiment could also be the early Asian news surrounding the US Senate’s passage of $484 billion COVID-19 relief package and BOJ’s likely decline of economic and price forecasts. Moreover, statements from BOE’s Bailey were also key highlights from the early Asian session.

On the flip side, Trump showed some willingness to deliver another relief plan while also pushing for an economic reopen program but this failed to extend Friday’s risk-on market sentiment. The yellow metal got mild support earlier by the People’s Bank of China’s (PBOC) rate cut.

The 10-year US Treasury yields dropped more than 2-basis points (bps) to 0.634%, whereas Asian stocks also struggle. Looking forward, traders will keep their eyes on the virus-related headlines for taking fresh directions.

Daily Support and Resistance

Support Resistance
1665.46 1703.62
1643.55 1719.87
1605.39 1758.03
Pivot Point 1681.71

Technically, gold is bouncing off above a strong support area of 1,672 to trade around 1,685 level. Closing of candles below 1,701 levels may drive some bearish correction in the market while the major resistance stays around 1,712.

Below this, we may see some selling bias in gold today. The 50 EMA is suggesting buying while the MACD is suggesting selling trend, but histograms are becoming smaller, suggestings chances of a bullish reversal. Let’s look for buying trades over 1690.72 and selling trades below 1681.71 today.

Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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