Gold – XAU/USD Analysis - April 26, 2021

Upward Channel Breakout

The precious metal gold closed at $1,777.00 after placing a high of $1,794.50 and a low of $1,772.00. Gold prices extended their losses on Friday amid a strong U.S. dollar due to a better-than-expected U.S. macro-economic data release. The stronger than expected U.S. home sales prompted a surge in U.S. Treasury yields that reduced the investment appeal in precious metal. In the past week, gold has shown a series of impressive gains as both the U.S. 10-year Treasury yield and the dollar index retreated.

On the data front, at 18:45 GMT, the Flash manufacturing PMI for April remained flat with the expectations of 60.6. The Flash Services PMI rose in April to 63.1 against the forecasted 61.6 and supported the U.S. dollar that weighed on gold prices. At 19:00 GMT, the New Home Sales in March rose to 1021K against the projected 885K and supported the U.S. dollar, and added further pressure over the precious metal. The U.S. Home Sales rose at the fastest pace in March since 2006 and gave strength to the greenback that added further losses in the yellow metal prices. Furthermore, the U.S. dollar was also strong on Friday as health officials of the country announced that after more than a year of trauma and heartbreak, states were returning to normalcy. According to state officials, they were close to the finish line as the country moved forward with the rollout of COVID-vaccinations.

As to the Centers for Disease Control and Prevention, about 138.6 million people in the U.S. have undergone at least one coronavirus vaccine shot, and about 1.3 million more were getting the first dose every day. More than 80% of people above 65 ages have had one dose and will likewise complete vaccination. The fact that the U.S. was achieving its goals of inoculating vaccine shots earlier than its schedule also supported the rising trend in the U.S. dollar and weighed on yellow metal prices.

The U.S. Treasury, on a 10-year note, rose to 1.5820% on Friday that helped the U.S. dollar, and supported bearish pressure over the yellow metal. Despite a sudden decline in U.S. Dollar Index on Friday to its lowest level since March 3 at 90.81, yellow metal posted losses on the ending day of the week.

Gold Intraday Technical Level

Support Resistance

1775.74 1790.44

1770.27 1799.67

1761.04 1805.14

Pivot Point: 1784.97

Gold - XAU/USD - Technical Outlook 

Gold is trading with a slight bullish recovery at $1,780 level, having supported at 1,773 level. The precious metal violated the upward channel on the hourly timeframe on Friday, leading the gold price towards a 1,773 support level. Currently, gold is trading at 1,781 level and heading north to complete 50% Fibonacci retracement at 1,783 level. Next resistance stays at 61.8% Fibonacci retracement level of 1,786. It's interesting to know that the same level is also extended by 50 periods EMA and previously violated upward channel; thus, this level will be a substantial hurdle for gold bulls. All the best and have a fantastic week ahead!