Gold on a Bullish Run – Why $1,832 is Crucial for the Uptrend
Arslan Butt • 2 min read
Gold closed at $1,843.75, after setting a high of $1,844.75, and a low of $1,829.40. The precious metal reversed its course on Monday and turned green after declining for two consecutive sessions, on the back of increased safe-haven demand, despite the rising prices of the US dollar. The US Dollar Index (DXY), which measures the greenback’s value against a basket of six major currencies, extended its gains, rising to 96.13.
On the other hand, the benchmark 10-year Treasury yield fell to a 7-day low; however, it recovered all of its daily losses during the late trading hours and remained flat throughout the session on Monday. The escalating tensions on the Russia-Ukraine border and the potential threat of Russia invading Ukraine raised the safe-haven appeal of gold, pushing it higher on Monday. Furthermore, US President Biden has directed the US Secretary of Defense, Lloyd Austin, to issue “ready-to-deploy” orders. He took this step to prepare for a potential Russian invasion of Ukraine, which seems imminent.
On the data front, at 19:45 GMT, the Flash Manufacturing PMI came in. It dropped to 55.0 against the expected 56.9 and weighed on the dollar. The Flash Services PMI also declined, coming in at 50.9, against the forecast of 54.9, which weighed the dollar. The unfavorable data from the US added further to the gains in the gold prices on Monday. However, the increase in gold was limited, as investors continued to brace for the US Federal Reserve’s latest policy meeting. On Wednesday, the Fed will hold its policy meeting in which it is widely expected that monetary policy will be tightened at a faster pace than anticipated, in order to curb the continuous rise in inflation. The increase in the prices of almost everything in the United States is now viewed as the biggest threat to the US economy in 2022.
Gold (XAU/USD) – A Technical Outlook
Today, the precious metal, gold is trading at the 1,840 level, with a solid bullish bias. The triple bottom pattern at the 1,832 level has extended support and triggered a bullish recovery. Gold is heading north towards the next target level of 1,850. On the higher side, the XAU/USD may find the next significant resistance at the 1,865 level.
Daily Technical Levels
Pivot Point: 1,839.30
On the lower side, the support holds at around the 1,832 level, and a breakout here could lead gold towards 1,827. On the 2-hour chart, the 50-day simple moving average extends solid support at $1,827-29. Therefore, the closing of candles above this line supports a continued uptrend. Consider taking a buy trade over the 1,832 level today. Good luck!