Chart of the Day XAUUSD (Gold)

Trading Tips

XAUUSD (Gold) momentum divergence to be addressed – Probable Price Path

Gold firmed on Wednesday buoyed by rising demand for safe-haven investments, as the extent of damage from the coronavirus became more apparent following bleak data from major economies and optimism about a potential vaccine fizzled out. Spot gold was up 0.2% at $ 1,747.82 per ounce by 0808 GMT. U.S. gold futures rose 0.4% to $ 1,752.40. “The so called ‘vaccine hope’ rally in equities has weakened. Gold is back in focus with bad economic releases… trade relations can take an ugly turn at any moment,” said Jigar Trivedi, commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai. The optimism from early data for a vaccine faltered after a medical news website reported it was insufficient, causing U.S. equities to fall and Asian stocks to be flat after rallying earlier this week. U.S. homebuilding dropped by the most on record in April and permits for future construction tumbled, leading to fears the pandemic would lead to the deepest economic contraction in the second quarter since the Great Depression.In Japan, business confidence collapsed in May, hitting decade lows as firms braced for a protracted period of economic weakness, the Reuters Tankan survey showed.Markets now await the Federal Open Market Committee’s April 28-29 policy meeting minutes at 1800 GMT.In testimony before the U.S. Senate Banking Committee, Federal Reserve Chairman Jerome Powell said the Fed was looking at extending access to the credit facilities to additional borrowers, including states with smaller populations.”What the Fed does in the next few months will be pretty important, and certainly Powell did indicate that the rates would remain near zero for foreseeable future,” ANZ analyst Daniel Hynes said. Lower interest rates benefit the non-interest bearing gold.

From a technical and trading perspective, XAUUSD has made a break from the prolonged consolidation and contracting range, however, price has stalled at the primary equality objective 1766 pretty much tto the tick. Of note is the significant momentum divergence that has been witnessed during this trade higher. Bearish exposure will likely be rewarded ona daily close below the near term volume weighted average price currently 1737, expect some initial support back to the big figure 1700 but as any bounce here fails to make new highs then bears can look for a test of symmetry swing support back to 1525 as weak hands get shaken out of crowded long positions. A close above 1770 would negate the bearish thesis opening a move to test 1800.

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 70% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Share this post:

Let’s block ads! (Why?)


Leave a Reply

Your email address will not be published. Required fields are marked *