Gold Price Forecast – Ascending Triangle Breakout, Brace for Buying! - Forex News by FX Leaders
Gold - XAU/USD Chart

Gold Price Forecast – Ascending Triangle Breakout, Brace for Buying!

Posted Friday, May 7, 2021 by
Arslan Butt • 3 min read

During Friday’s Asian trading session, the safe haven metal gold succeeded in breaking above the $1,800 mark, hitting the highest levels since February. However, the bullish bias surrounding the bullion prices was mainly sponsored by the positive U.S. economic data, which pushed the benchmark U.S. 10-year Treasury yield to a two-week low and U.S. dollar one-week low. In simple words, the bearish bias surrounding the U.S. dollar was seen as one of the critical factors that lend some additional support to the dollar-denominated commodity. Moreover, the intensifying US-China tussle and the escalating coronavirus (COVID-19) woes also lend additional support to the safe haven GOLD .

Conversely, the upbeat market sentiment, backed by the combination of factors, becomes one of the key factors that kept the lid on any additional gains in the safe haven metal. In the meantime, the gains were also capped by the reports suggesting that the U.S. and the European Union’s (E.U.) are up to support the coronavirus (COVID-19) vaccine patents. At the particular time, the bullion price is trading at 1,819.39 and consolidating in the range between 1,812.94 and 1,822.34. Looking forward, the traders seem cautious to place any strong position ahead of the key U.S. data, which is due to be released later in the day.

Despite the ever-increasing coronavirus (COVID-19) fears and the Western tussle with China, the market trading sentiment managed to extend its overnight bullish performance and stay firmer around 4,200, up 0.16% on the day as the previously released upbeat U.S. economic data suggests that the world’s largest economy is on the way to recovery. 498,000 initial jobless claims were filed over the past week at the data front, the lowest number since mid-March 2020 when COVID-19 was declared a pandemic.In addition, the upbeat mood could also be tied to the reports suggesting that the U.S. and the European Union’s (E.U.) are up to support the coronavirus (COVID-19) vaccine patents which in turn, helped traders to calm down. Across the ocean, the Federal Reserve (Fed) policymakers’ recent rejection of the rate-hike fears was also seen as one of the key factors behind the latest market optimism. However, the prevalent buying bias surrounding the market trading mood was seen as one of the key factors that kept the lid on any additional gold prices.

At the USD front, the broad-based U.S. dollar failed to stop its early-day negative performance and dropped to a one-week low amid prevalent market upbeat mood, which undermined the safe haven demand in the market and contributed to the U.S. dollar losses. Meanwhile, the benchmark U.S. 10-year Treasury yield dropped near the two-week low in the wake of positive economic data from the U.S., which put further pressure on the U.S. dollar. Therefore, the losses in the U.S. dollar were seen as one of the key factors that help the yellow metal to stay bid as the price of GOLD is inversely related to the price of the U.S. dollar.

Moreover, the ever-increasing coronavirus cases in Asia, especially in Japan, Canada, and India, probe the market risk-on mood, which was seen as another key factor that boosts the safe haven metal prices. Apart from this, U.S. investment limits on Chinese companies also weigh on the market risk tone. In the meantime, Beijing did not show any interest in talking business to Australia, which also challenging the market’s upbeat mood and helped the gold prices to stay bid.

Moving on, the light calendar will offer a dull trading day ahead. However, the market traders will keep their eyes on the key U.S. data, trade numbers from China and Germany, which are due later in the day. Apart from this, the political headlines from the U.K., the E.U., and the U.S. may entertain markets. Meanwhile, the U.S. dollar price movement will continue to play a crucial role in the gold direction.

Gold - XAU/USD Chart

Gold – XAU/USD – Daily Technical Levels

S3 1746.44
S2 1776.73
S1 1795.9
Pivot Point 1807.02
R1 1826.19
R2 1837.31
R3 1867.6On the technical side, GOLD is trading with a strong bullish bias at 1,817 level, having violated an ascending triangle pattern on the 4-hour timeframe. On the higher side, the precious metal is likely to face resistance at 1,830 level. Gold has closed a bullish engulfing followed by ascending triangle breakout; therefore, the odds of bullish bias remain strong. On the lower side, the XAU/USD pair can take a dip until the next support area of 1,814 level, and below this, the next support is likely to be found around 1,795. A bullish breakout of 1,821 levels can lead the metal towards a 1,830 level on the higher side. Let’s consider taking a buy trade over 1,807 level today. Good luck!
 

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