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Gold Price Prediction: Downward Trendline Pressures, Sell Opportunity Ahead!

Gold Price Prediction: Downward Trendline Pressures, Sell Opportunity Ahead!

Posted Thursday, March 25, 2021 by
Arslan Butt • 3 min read

GOLD prices closed at 1733.20 after placing a high of 1737.70 and a low of 1722.30. After dropping for two consecutive sessions, gold prices recovered a little on Wednesday amid the support from some safe-haven buying that emerged after a renewed coronavirus spread in Europe. In Germany, the new coronavirus variants were spreading across the country that triggered a rapid rise in infections. This prompted the government to extend its lockdown measures in April which weighed on the single currency Euro.

The rising number of coronavirus cases in Europe and extended lockdown restrictions added a risk-off market sentiment that ultimately supported the safe-haven yellow metal prices on Wednesday. On the other hand, gold investors have shown little reaction to the first two days of congressional testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen on the US economy’s health as America was struggling with the impact of the coronavirus pandemic.

Federal officials have been firm on inflation concerns and have indicated that any inflation this year will be temporary that would weigh on gold prices. Fed officials have shown no worries about the rising prices; instead, they were more focused on getting back the economy to pre-pandemic levels. Furthermore, the US dollar was also weak amid the release of weaker-than-expected macroeconomic data on Wednesday.

On the data front, at 17:30 GMT, the Core Durable Goods Orders for February dropped to -0.9% against the expected 0.6% and weighed on the US dollar that added further gains in gold prices. In February, the Durable Goods Orders also declined to -1.1% against the expected 0.7% and weighed on the US dollar and supported the yellow metal gains. At 18:45 GMT, the Flash manufacturing PMI in March dropped to 59.0 against the expected 59.6 and weighed on the US dollar and added further upward momentum in gold prices. The Flash Services PMI remained flat with the projections of 60.0.On Wednesday, the New York Federal Reserve President John Williams said that the Federal Reserve timeline would depend on the economy’s conditions when it starts to raise rates. He said that the US economy could recover more rapidly this year as coronavirus cases were dropping and more people were getting vaccinated. However, Williams declined to provide any fixed date when the Federal Reserve might start to withdraw some of the fiscal support. On Wednesday, Powell and Yellen appeared for a second day for virtual Capitol Hill testimony with the Senate Banking Committee members. The hearing’s focus was on the Coronavirus Aid, Relief, and Economic Security Act, adopted in the early days of the pandemic to provide financial aid to individuals and businesses. Moreover, the gains in gold prices could also be attributed to the fresh safe-haven demand in the market after the rising tensions between China and the US, the EU, and the UK. The western countries, including the US, EU, Canada, and the UK, imposed sanctions on four Chinese officials in a coordinated action against Beijing for human rights abuses in China’s northwestern Xinjiang region.

In response to this, China immediately imposed retaliatory sanctions on European lawmakers. This move from Beijing resulted in increased warnings from the European Parliament members saying that they would not ratify the EU-China investment deal that was agreed to in December. These rising tensions between Western countries and China have raised safe-haven demand, supporting the yellow metal prices.

Gold Price Prediction: Downward Trendline Pressures, Sell Opportunity Ahead!

Daily Technical Levels
Support Resistance
1717.86 1737.16
1710.63 1749.23
1698.56 1756.46
Pivot Point: 1729.93

The technical side of the precious metal gold remains unchanged as it’s trading at $1,736 level, gaining support around the 1,734 marks and a resistance level of 1,741. The MACD and RSI support a buying trend now, whereas the 20 & 50 periods EMA are also suggesting a bullish bias. On the two-hourly timeframes, the precious metal gold is gaining support at 1,734 levels extended by an EMA line. GOLD can exhibit buying trading with an immediate target of 1,741 level. Good luck!

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