Gold – XAU/USD Analysis - April 20, 2021

20 EMA Supports Metal

Gold prices were closed at 1772.25 after placing a high of 1790.35 and a low of 1766.70. Gold prices tried to continue their previous day's bullish trend on Monday and continued rising during the first half of the day but reversed their course in the second half of the day and ended with a bearish trend. After rising for two consecutive sessions, gold dropped on Monday after reaching its highest level since 25th February at 1790. However, gold couldn't live there for long and retreated as the U.S. bond yields started to recover after three days of disappointing performance.

Gold was rising toward the 1,800 level amid the recent weakness in the U.S. dollar, but after reaching its more than 7-week highest level, the yellow metal reversed its momentum on the back of soaring U.S. Treasury yields that weighed on non-yielding bullion's appeal. The benchmark 10-year U.S. Treasury yield rose above 1.6% after hitting a multi-week lowest level last week.

On Monday, U.S. President Joe Biden held his second infrastructure meeting with Democratic and Republican members of Congress as GOP lawmakers were pushing to shrink the $2 trillion proposals by the president. Usually, such big-sized stimulus measures led to dollar debasement and inflation that could benefit gold due to its status as an inflation hedge. However, this logic has not supported gold prices; instead, gold has suffered due to rising yields.

On the other hand, China, the world's biggest gold consumer, has permitted domestic and international banks to import a large amount of gold into the country. This information was received from five similar sources with the matter and pushed gold prices higher on Monday. Furthermore, the losses in gold prices on Monday could also be attributed to the latest news from the U.S. that has reached another important milestone in the race to protect its population against the coronavirus.

On Monday, the U.S. reported that about 25.4% of its population had been fully vaccinated, which means more than a quarter of Americans are fully protected against coronavirus, with more than 84 million people receiving both vaccine shots. Centers for Disease Control and Prevention released this report on Sunday. This news added support to the weak U.S. dollar and added pressure on the rising prices of gold on Monday.

Gold Intraday Technical Level

Support Resistance

1762.51 1786.16

1752.78 1800.08

1738.86 1809.81

Pivot Point; 1776.43

Gold - XAU/USD - Technical Outlook 

On Tuesday, gold is trading bearish at 1,772 level, gaining immediate support at 1,769. On the 4- hour timeframe, the support is extended by 20 periods EMA (exponential moving average), and gold has closed series of Doji and Spinning top candles right above 1,769 level. Typically, such patterns trigger an upward movement in the market; therefore, the gold’s next resistance prevails at 1,789 level today.

On the bearish side, the breakout of 1,769 support opens up room for a bearish trend until the next support area of 1,759 and 1,754. The MACD and RSI are supporting the bullish trend in gold today. The U.S. economy isn’t expected to release any significant economic events today; therefore, the price action in gold will heavily depend upon the technical levels. All the best!