Gold Price Forecast – Upward Channel Channel to Support Buying, Advanced NFP Ahead!
During Wednesday’s Asian trading session, the yellow metal failed to stop its overnight bearish moves and drew some further offers around below the $1,780 level. The prevalent risk-on market sentiment tends to weaken the safe-haven assets and contributes to the yellow metal losses. Meanwhile, the increasing progress over the COVID-19 vaccination allowed more companies to reopen in the U.S., which in turn exerted some additional positive impact on the market trading sentiment. Across the pond, the prevalent bullish bias surrounding the dollar has also played its key role in weakening GOLD prices as they are inversely related to the price of the U.S. dollar. Alternatively, Japan decided to extend the third state of emergency in Tokyo. At the same time, Canada increased virus-led activity restrictions in Alberta province as coronavirus resurgence gains momentum, probing the risk-on mood and helps the gold price to limits its deeper losses. As of writing, the yellow metal price is trading at 1,780.89 and consolidating in the range between 1,771.28 and 1,799.08.
Despite the worsening coronavirus (COVID-19) conditions in Japan and Canada, the market trading sentiment managed to stop its early day bearish moves and turned bullish on the day. This was witnessed by the bullish appearance of Asia-Pacific stocks and fresh upticks in the S&P 500 Futures, highlighting the risk-on mood. However, the market trading sentiment was being supported by the optimism concerning the coronavirus (COVID-19) vaccine. Across the pond, U.S. Treasury Secretary Janet Yellen reversed her initial comments backing the rate hike, which also helped the market mood to stay bid. Meanwhile, the upticks in the market sentiment were further bolstered by reports suggesting that the Federal Reserve Bank of Minneapolis President Neel Kashkari turned down the need for any action unless inflation surprises. Therefore, the bullish bias in the market put a bid under the U.S. stocks, which was seen as one of the key factors that weakening the safe-haven gold prices.
Despite the upbeat market mood, the broad-based U.S. dollar succeeded in extending its early-day positive moves. It drew some further bids on the day as investors are still cheering the U.S. Treasury Secretary Janet Yellen’s comments about the possibility of interest rate hikes. Yellen said that the interest rates may need to rise to stop the U.S. economy from overheating, which also helps the U.S. dollar to stay bid, at least for now. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.31% to 91.210 by 13:03 AM ET (5:03 AM GMT).Conversely, the coronavirus (COVID-19) condition in Japan and Canada picked up the further pace, raising doubts about global economic performance. This negative report kept the lid on any additional gains in the market trading sentiment, which may help gold prices to limit their deeper losses.
Looking forward, the market traders will keep their eyes on the upcoming economic data from the U.S., including the Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers Index (PMI) and ADP National Employment Report, both due later in the day. In addition to this, the virus and stimulus headlines will also be key to watch for fresh direction. Meanwhile, the U.S. dollar price movement will continue to play a key role in the bullion direction.
Gold Daily Support and Resistance
S1 1736.52
S2 1762.13
S3 1777.48
Pivot Point 1787.74
R1 1803.09
R2 1813.35
R3 1838.96
On the technical side, GOLD is trading with a strong bearish bias at 1,787 level, having formed an ascending triangle pattern on the 4-hour timeframe. On the higher side, the precious metal is likely to face resistance at 1,798 level. Gold has closed a Doji candle followed by strong bullish momentum; therefore, the odds of bearish correction stay solid. On the lower side, the XAU/USD pair can take a dip until the next support area of 1,775 level, and below this, the next support is likely to be found around 1,765. A bullish breakout of 1,798 levels can lead the metal towards a 1,816 level on the higher side. Let’s consider placing a sell limit below 1,798 level today. Good luck!
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