Where Did You Gold? –Bears Are Close to Key Support Levels

The bears have been dominating the scene, and even taking the price of XAU/USD to slightly below $1,675. Since then, the price has been moving sideways and is presently at $1,678.90 and has been moving above and below its 50-day Simple Moving Average (SMA).

At the time of writing, it is now trading below its 50-day SMA. The Moving Average Convergence Divergence (MACD) is currently pointing towards a bearish trend, with the Relative Strength Index standing at 43. Meanwhile, the price of spot gold is currently at $1.688.49.

The bears are close to a battle with support levels around $1,675 (a downwards sloping trend line from August 2020) and $1,670, according to analyst Anil Panchal of FX Street. Meanwhile, on the upside, the bulls must give their best to be victorious over resistance levels at $1,700 and $1,740 before the ultimate challenge at $1,765, a key resistance from November 2020. 

Source: Yahoo Finance

Markets are riding on hopes of a recovering economy, following upbeat nonfarm payrolls and progress in the Biden Stimulus Package. The U.S. House is set to vote on the bill that was approved by the U.S. Senate, following which, the bill will be sent to President Biden.

The bill that was approved by the Senate differs from the original proposal, with federal unemployment benefits reduced to $300 per week (instead of $400), with a one-week extension of its duration to September 6 and an exclusion of a $15 minimum wage. However, the Democrats appear to be willing to lose a battle to win the war as they are aiming for the bill to be signed into law by President Biden, amidst a ticking clock on the expiry of unemployment benefits on March 14.

A brighter hope in the world may potentially take some shine off the safe-haven gold, which gained favour during the pandemic uncertainties. As things continue to settle in the world, it appears that the grip of the gold bulls may loosen.

However, with the discovery of new Covid variants, the world should be mindful of the virus rearing its ugly head if caution is not exercised. With spring break coming soon for universities in the U.S., Dr Rochelle Walensky, the director of the U.S. Centres for Disease Control and Prevention (CDC) had cautioned against travel, reported an article in the Cable News Network on March 6. There are concerns over the spreading of the B.1.1.7 Covid-19 variant, which is also known as the U.K. variant. It may be too soon for the world to let its guard down and assume that we are out of the woods when it comes to this devastating pandemic.

That being said, there could be cause yet for the gold bulls, so let’s keep our eyes on this interesting match.

XAU/USD (as of Mar 9, 2021, 10.20 a.m., GMT +8) - $1,678.90

FOLLOWME XAU/USD User Sentiment (as of Mar 9, 2021 at 11.05 a.m.)

Short – 47.32%

Long – 52.68%