Technical Analysis

Gold – XAU/USD Analysis - April 28, 2021

By LonghornFX Technical Analysis
Apr 28, 20213 min

Choppy Session in Play!

Gold prices closed at $1775.25 after placing a high of $1785.70 and a low of $1773.95. Gold dropped for the 4th consecutive session on Tuesday ahead of the Federal Reserve's interest rate decision. Market participants were also awaiting the post-meeting news conference of Fed chief Jerome Powel that is scheduled for Wednesday.

The U.S. Dollar Index (DXY) that measures the greenback's value against the basket of six major currencies, fell on Tuesday to 90.81. The U.S. Treasury yields on a 10-year note rose on Tuesday to above 1.62% level that decreased the demand for non-yielding bullion.

The April monetary policy meeting of the Federal Reserve has started on Tuesday and will conclude on Wednesday. The FOMC members discussed and evaluated their current monetary policy, and their decision will be published on Wednesday in a statement released by the FED. Chairman Jerome Powell's press conference will follow it.

The Fed members are expected to vote in favor of continuing their current interest rate policy and leave the Fed funds rate unchanged that is currently set between 0% and 0.25%. The Fed is also expected to continue to add monetary liquidity through QE, the asset purchase program of the Fed, which has been purchasing $120 billion worth of treasuries and mortgage-backed securities monthly throughout the pandemic.

The comments from Jerome Powell regarding raising interest rates, ending their asset purchases monthly, and focus on rising U.S. Treasury yields on 10-year notes. If the chairman's comments failed to increase yields on U.S. 10-year Treasury note, then gold prices could break above the key resistance level at $1800. Furthermore, any acknowledgment of inflation and the anticipation that more could help gold break above $1800. No major policy change is anticipated from the Fed meeting; however, investors will pay close attention to Chairman Jerome Powell's economic outlook.

Later this week, U.S. President Joe Biden is also expected to address Congress; this will be his first address to Congress since he was elected approximately 100 days ago. Investors will be looking forward to his comments to find a clue about the next move in gold prices this week.

On the data front, at 18:00 GMT, the Housing Price Index from the U.S. declined to 0.9% against the expected 1.0% and weighed on the U.S. dollar that capped further losses in gold prices on Tuesday. The S&P/CS Composite-20 HPI for the year remained flat at 11.8%. At 18:59 GMT, the Richmond Manufacturing Index dropped to 17 against the forecasted 22 and weighed on the U.S. dollar. At 19:00 GMT, the CB Consumer Confidence surged in April to 121.7 against the expected 113.1 and supported the U.S. dollar that ultimately added losses in yellow metal prices on Tuesday.

Gold Intraday Technical Level

Support Resistance

1770.90 1782.65

1766.55 1790.05

1759.15 1794.40

Pivot Point: 1778.30

Gold - XAU/USD - Technical Outlook

On Thursday, the precious metal gold is trading with a strong bearish bias at 1,771 level, disrupting the support level at 1,778. On the 4-hour timeframe, gold has violated the triangle pattern that was extending support at 1,778 level. This support level is violated and working as resistance now. On the lower side, gold has the potential to go after the next support area of 1,763. Gold is exhibiting bearish crossover on the 4-hour timeframe, not only on the 20 & 50 periods EMA but also on the RSI and MACD, suggesting a strong selling trend. The closing of candles below 1,778 is demonstrating the dominance of sellers in gold. Next, support holds around 1,763 and 1,759.

All the best!


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