Gold Price Forecast – Ascending Triangle Pattern in Play, Brace for Breakout! - Forex News by FX Leaders
Gold - 4 Hour Chart

Gold Price Forecast – Ascending Triangle Pattern in Play, Brace for Breakout!

Posted Thursday, May 6, 2021 by
Arslan Butt • 3 min read

During Thursday’s Asian trading hours, the precious metal gold managed to extend its bullish overnight run-up. It drew some additional bids around well above the $1,790 level as the coronavirus (COVID-19) woes are increasing in India, Japan, and Canada, which keeps the market trading sentiment under pressure and contributes to the GOLD gains. In the meantime, Australia recently recorded a new coronavirus case in New South Wales (NSW), which as a result, recalled some activity restrictions.

Moreover, the upticks in the bullion prices were further bolstered by the escalating geopolitical tensions, which is getting worse day by day as the G7 nations recently criticized the Dragon Nation’s role in global politics and trade. Alternatively, the previously released, largely positive U.S. economic data and faster vaccination progress keep questioning the market risk-off mood, which was seen as one of the key factors that kept the pressure on any further gains in the yellow metal prices. The gains in gold were also capped by the stronger U.S. dollar as the price of bullion is negatively correlated with price of the U.S. dollar. However, the U.S. dollar was being supported by the previously released, largely positive U.S. economic data. Apart from this, the downbeat market sentiment offered further support to the safe-haven U.S. dollar. As of writing, the yellow metal price is trading at 1,790.24 and consolidating in the range between 1,782.12 and 1,790.33.

Despite the return of traders from Japan and China after a long break since last Friday, the global equity market failed to extend its early-day bullish performance. It turned sour on the day as the coronavirus (COVID-19) cases in Canada, India, and Japan escalated further, which becomes the key factor that kept the market trading sentiment under pressure. As per the latest report, Australia recently reported a new coronavirus case in New South Wales (NSW), which in turn, forced Aussie authorities to recall some activity restrictions. In addition, Japan is also thinking of extending emergency in almost four areas beyond the May 11 deadline amid increasing virus cases in the Asian major. This news added to the market’s risk-off sentiment and helped the bullion prices to stay bid.

Across the ocean, the reason for the bearish bias around the global equity market could also be attributed to the fresh reports suggesting that the policymakers from the G7 nations criticizing China and Russia for several reasons, which in turn, could push China towards harsh revenge as the key diplomats rejoined the market after three days off.

At the USD front, the broad-based U.S. dollar managed to extend its bullish overnight run-up and recovered from a one-month low over the past week as investors started to favor the safe-haven assets in the wake of risk-off market sentiment. Apart from this, the upticks in the U.S. dollar were further bolstered by the previously released, largely positive U.S. economic data, which suggests that the U.S. economy is on the way to recovery. The U.S. Dollar Index tracks the greenback against a bucket of other currencies rose by 0.02% to 91.308 by 12:33 AM ET (4:33 AM GMT).

Traders will keep their eyes only on the second-tier readings from Europe and the BOE’s Super Thursday as no major moves are expected ahead of the key U.S. employment report. While the risk catalysts like geopolitics and the virus woes will not lose their importance.

Gold - 4 Hour Chart

Gold – XAU/USD – Daily Support and Resistance

S1 1746.05

S2 1763.76

S3 1774.78

Pivot Point 1781.46

R1 1792.48

R2 1799.17

R3 1816.87

On the technical side, GOLD is trading with a neutral bias at 1,792 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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