Gold – XAU/USD Analysis - April 29, 2021

Choppy Session in Play!

Gold prices were closed at 1773.20 after placing a high of 1774.00 and a low of 1764.60. gold prices rebounded on Wednesday after falling for four consecutive days. The precious metal prices rose after the U.S. Federal Reserve pledged to maintain an easy monetary policy to aid economic recovery. At the same time, the weakness in the U.S. dollar provided further support.

During the first half of the session, gold remained under pressure ahead of the Fed monetary policy decision. However, after its announcement during late trading American trading hours, precious metal started to recover its previous losses and reversed its course.

On Wednesday, the Federal Reserve said the vaccine rollout had improved the U.S. economy. However, still, it held interest rates near zero as part of its commitment to aggressive economic stimulus. Fed also maintained the USD 120 billion bond-buying programs. The Fed said that inflation has risen, but the higher readings were attributed to transitory factors. The Central Bank warned that higher inflation could result from the base effect of measuring year-over-year changes in addition to supply chain constraints.

Fed said that the policy-setting will continue to provide accommodation to the economy as more than 8 million people were still out of jobs than pre-pandemic levels. The statement released by Fed did not show any signs of slowing on its QE program, which is currently absorbing the U.S. Treasuries and agency mortgage-backed securities worth $120 billion a month. The U.S. Treasury yields on a 10-year note that reached above 1.65% level during the first half of the day retreated and fell to 1.60% level after the speech of Fed Chair Jerome Powell on Wednesday. Powell reaffirmed that it was not the time to discuss tapering that sent the treasury yields lower sharply. This drop-in yields added pressure on the already weak U.S. dollar and sent the U.S. Dollar Index to its lowest level since February 26 at 90.53.

The weak U.S. dollar then added further strength to the rising prices of yellow metal on Wednesday. On the data front, at 17:30 GMT, the Goods Trade Balance from the U.S. dropped to -90.6B against the expected -88.2B and weighed on the U.S. dollar that added strength n the yellow metal prices. The Prelim Wholesale Inventories increased to 1.4% against the anticipated 0.5% and weighed on the U.S. dollar and added further gains in precious metal prices.

Gold Intraday Technical Level

Support Resistance

1776.46 1780.76

1774.93 1783.53

1772.16 1785.06

Pivot Point: 1779.23

Gold - XAU/USD - Technical Outlook

Gold is trading with a strong bearish bias at 1,779 level, violating the support level at 1,782. On the 4-hour timeframe, gold has formed bearish engulfing candles on the hourly timeframe, demonstrating a strong selling trend in gold. On the downside, 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. Gold’s immediate resistance stays at 1,782 ad 1,789 while support stays at 1,777 and 1,763. All the best!