Where Did You Gold? – Outcome of The Battle Between Bulls And Bears Hangs In The Balance

Despite a brief upward momentum, XAU/USD has since slipped and at the time of writing, the price is at $1,731.10 and is trading below its 50-day Simple Moving Average (SMA). The Relative Strength Index (RSI) is currently at 44, which could point towards a ‘wait and see’ response from the market, given its bout of volatility. Meanwhile, the Moving Average Convergence Divergence shows a bearish trend. At present, the price of spot gold is $1,729.91. 

Source: Yahoo Finance

According to Anil Panchal from FX Street, a key resistance that challenges the bulls is at $1,765, which is the low from November 2020. Meanwhile, the bears have to conquer support at $1,680, representing the falling trend line from August.

The cause of either the bears and the bulls could be impacted by several key events this week such as the progress of the Biden Stimulus Package. As the deadline for the expiry of unemployment benefits draws closer, many eyes would be on the outcome from the U.S. Senate, where the bills have advanced after passing through the U.S. House of Representatives. The unemployment benefits will expire on March 14.

The market would also be keeping an eye out on the release of the U.S. Federal Reserve (Fed) Beige Book on March 3. The report is published eight times a year and before the Federal Open Market Committee (FOMC) meetings.

Meanwhile, the release of the nonfarm payrolls this Friday would also be on the radar, to give a glimpse into the state of the labour market in the U.S. Positive outcomes from these events could increase optimism in the market, which would not be good news for gold as traders might switch to riskier assets.

The progress of the vaccination against how fast the Covid-19 vaccine would also determine the success of the bulls against a growing risk-on sentiment. President Biden has assured that there will be enough vaccine for every adult in America by the end of May, which is two months earlier than planned. This would certainly buffer a lot of anxiety and concern about the end of the pandemic, and while it is impossible to name a definite date, this is certainly a small light at the end of the tunnel.

As the bulls and the bears continue in the battle, let's watch how it pans out in this space.

XAU/USD (as of Mar 3, 2021, 10.55 a.m., GMT +8) - $1,731.10

FOLLOWME XAU/USD User Sentiment (as of Mar 3, 2021 at 11.30 a.m.)

Short – 47.90%

Long – 52.10%