Where Did You Gold? – Are the Bears Winning The Battle?

The gold bulls are taking a breather as the price of gold has dipped below $1,800 and at present, stands at $1,792. Although the current price is above its 50-day Simple Moving Average (SMA), the price was mostly trading below it yesterday; leaving room for the question if the bears are getting ready to take control.

In the meantime, the Relative Strength Index (RSI) is heading north towards an overbought condition and it is currently at 59; giving us a picture that buyers are taking advantage of this slight dip. At present, the Moving Average Convergence Divergence is indicating a bullish reversal. 

Source: Yahoo Finance

In the meantime, the price is close to the first support level of $1,790, with the remaining support levels resting at $1,785, $1,765 (which is the low from November 2020), and $1,748, as reported by analyst Anil Panchal, of FX Street. Meanwhile, for the bulls to regain control, resistance levels are at $1,800, $1,835, and $1,843 (which is the monthly resistance line). At present, the price of spot gold is $1,800.84.

Meanwhile, the U.S. 10-year Treasury yields have hit the highest level in a year, when it broke past the 1.28% level for the first time since February 2020, the Consumer News and Business Channel (CNBC) reported. This could further provide a boost to the USD, which would not favour the gold bulls.

Overall, the market is optimistic given the progress of vaccination, particularly in the U.S., U.K, and Israel as well as the declining number of new cases in America. Meanwhile, the $1.9 trillion Biden stimulus package continues to make encouraging progress, with the Cable News Network (CNN) suggesting that the plan could be tested on the House floor as early as the end of next week and could be rolled out by March 8, if all goes well.

The stimulus package, which is anticipated to fuel economic recovery, combined with the reducing number of cases in the U.S., hints at normalcy returning soon. Persisting optimism could lure traders away from the safe-haven gold, which will then favour the cause of gold bears to take the reins.

In the meantime, traders would be keeping an eye out for the U.S. Federal Open Market Committee (FOMC) minutes as well as January’s retail sales result, forecasted to gain 1%, after recording losses of 0.7% in December and 1.4% in November.

XAU/USD (as of Feb 17, 2021, 11.20 a.m., GMT +8) - $1,792

FOLLOWME XAU/USD User Sentiment (as of Feb 17, 2021 at 11.25 a.m.)

Short – 47.57%

Long – 52.43%