Gold (XAUUSD) experienced another week of gains, marking its third consecutive week of appreciation, with prices rising by 4.28%. The rally in gold prices persisted due to speculative buying and ongoing geopolitical tensions in the Middle East, which outweighed the positive impact of strong US job growth in March.
The robust US jobs report has cast doubt on the Federal Reserve’s ability to cut rates this year, potentially boosting gold’s appeal as a non-interest-bearing asset. However, rising US Treasury yields, reflecting expectations of persistent inflation, could limit gold’s gains. This week’s key data releases, including the US CPI report and FOMC meeting minutes, will be closely scrutinised by investors for further clues on the inflation and rate cut outlook.
Technical Analysis (4-Hour Chart)
On the 4-hour chart, gold continues its upward trajectory, trading at $2335.11/ounce. The recent weeks have seen a robust bullish run, with price action consistently closing above the upward-sloping 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), suggesting that the momentum remains on the buyer’s side.
Therefore, the all-time high of $2,353.83/ounce could come into play in the session should the 20-SMA provide significant support. A successful break above the initial resistance on significant volume could strengthen the bullish momentum, leaving the 23.60% Fibonacci extension level ($2,381.21/ounce) and 50.00% Fibonacci extension level ($2,411.84/ounce) firmly in play.
However, with the RSI (72.54) already at overbought levels, a short-term correction could leave the $2,265.40/ounce acting as the initial level of interest lower. A sustained push below the initial support would likely bring the $2,211.59/ounce and $2,145.76/ounce within the bears’ clutches in the short term.
Summary
Gold’s bullish momentum persists as geopolitical tensions and inflationary concerns drive demand for the precious metal. Despite a third consecutive week of gains and overbought conditions in the short term, gold’s upward trajectory remains intact, supported by technical indicators and fundamental factors. This week’s data releases will be crucial in determining the direction of the next move, with a break above the all-time high likely to trigger a continuation of the uptrend, while a break below initial support at $2,265.40 could signal a deeper correction.
Sources: TradingView, Trading Economics, Simply Wall Street, MarketWatch.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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