Gold – XAU/USD Analysis - April 23, 2021

Bullish Channel Underpins Gold

On Thursday, the precious metal gold closed at 1784.25 after placing a high of 1798.00 and a low of 1777.25. Gold posted losses on Thursday after reaching near the $1800 level but faced resistance at $1798. However, in the first half of the day, yellow metal remained near its 8-week highest level amid the weaker U.S. Treasury yields and declining U.S. dollar. But in the second half of the day during American trading hours, the yellow metal started to face bearish pressure amid better than expected U.S. macroeconomic data release and reversed its course.

After primarily upbeat U.S. economic data, gold prices slumped that reduced the safe-haven appeal, and weighed on the precious metal that dragged it from reaching the $1800 level on Thursday. On the data front, at 17:30 GMT, the Unemployment Claims from the last week declined to 547K against the expected 607K and supported the U.S. dollar, and weighed on the yellow metal. At 19:00 GMT, the C.B. Leading Index raised to1.3% against the expected 1.0% and supported the U.S. dollar, and added further losses in gold prices. The Existing Home Sales declined in March to 6.01M against the forecasted6.18M and weighed on the U.S. dollar and capped further decline in precious metal prices.

As per the Director of the National Institutes of Health, Dr. Francis Collins, tens of millions of Americans haven't started their vaccination yet. He added that many of these people were still unsure whether they wanted to participate in the vaccination process. Collins insisted that getting the message out there could be a significant challenge as people were still undecided over getting the vaccine because they did not see the need to do so. The comments from Collins were followed by a report published last week indicating that the country is probable to reach a tipping point in the coming 2-4 weeks when vaccine supply would outstrip demand.

On the other hand, the U.S. Dollar Index that measures the value of the greenback against the basket of six major currencies, rose on Thursday and reached a 91.42 level that pushed the U.S. dollar higher and weighed on yellow metal prices. Simultaneously, the U.S. bond yield on a 10-year note declined on Thursday and continued its fall for the third consecutive session to reach a 1.5327 level. The declining U.S. treasury yields helped yellow metal to keep its losses limited on Thursday.

Meanwhile, on Wednesday, a bipartisan U.S. congressional attempt to counteract China got the market's attention when a Senate committee backed a bill pressing Beijing on human rights and economic competition. This could raise the tensions between the U.S. & China, and these fears gave a little support to the fading risk-off market and capped the losses in gold prices.

According to a poll, this year, the United States' economy will grow at its fastest annual pace in decades and will outperform most of its peers. However, the biggest risk to the economy over the next three months was underlined as another surge of the coronavirus pandemic. This poll helped find the outlook of the U.S. economy and supported the U.S. dollar that ultimately weighed on the yellow metal prices.

Gold Intraday Technical Level

Support Resistance

1781.96 1798.36

1771.63 1804.43

1765.56 1814.76

Pivot Point: 1788.03

Gold - XAU/USD - Technical Outlook

On Friday, gold is trading with a strong bearish bias at $1,787. Previously, the precious metal has violated the sideways trading $1,798 - $1,787 levels, and now it's gaining support at the $1,777 level. On the 4-hour timeframe, the precious metal is forming an upward channel that supports the buying trend in gold. The XAU/USD pair's resistance stands at $1,789 and $1,798 level on the higher side. The series of 20 & 50 periods EMA is supporting a bullish trend in gold. Simultaneously, the RSI and MACD are holding at 55 and 5.42, respectively, demonstrating that the bullish trend dominates in the market. Later today, the investor's focus will remain on the Flash Manufacturing PMI figures, which are expected to surge from 59.1 to 60.9. Positive data typically drives selling trends in gold prices and vice versa. All the best and have a fantastic weekend!