XAU/USD has been trading sideways with no dramatic price action spotted on the charts. At the time of writing, the price is at $1,822.20 and has dipped below its 50-day Simple Moving Average (SMA), which is denoted in purple. At present, the Relative Strength Index (RSI) is close to an oversold condition and stands at 36. A bearish trend is spotted on its Moving Average Convergence Divergence (MACD).
Source: Yahoo Finance
For the bears to take over the reins, analyst Anil Panchal from FX Street believes that key support levels lie at $1,818, $1,802.80 (which is January’s low), and $1,785. Meanwhile, for the bulls to move further upwards, key resistance lies at $1,823, $1,838-40, and $1,846. The current price of spot gold is at $ 1,825.90.
Analysts from Morgan Stanley do not believe that there will be much momentum from the gold bulls this year and foresee that the yellow metal could drip below $1,800 by end of this year. This is because of a lacklustre inflation rise and global economic recovery, which could lure attention away from gold.
However, if there is one thing that the historic year of 2020 has taught the world: it’s that anything can happen. One case in point is the global pandemic. With reports of new Covid-19 variants discovered, it could be too soon to call it quits for the gold bulls.
In the nearer term, the release of U.S. Federal Reserve (Fed) January policy meeting minutes would be closely watched and more importantly, if a dovish or hawkish sentiment will be seen from the Fed. The markets would also be keeping an eye out for results of the U.S. retail sales this week.
Although vaccine progress seems to be well underway, a caution by incoming World Trade Organisation chief, Ngozi Okonjo-Iweala, should not go unheeded. She warned that ‘vaccine nationalism’ could hinder a victory in the war against the virus and delay the speed of a global economic recovery.
In the meantime, the ultimate fate of the gold bulls and the bears remain to be seen, so this is a space worth watching.
XAU/USD (as of Feb 16, 2021, 11.20 a.m., GMT +8) - $1,822.20
FOLLOWME XAU/USD User Sentiment (as of Feb 16, 2021 at 11.50 a.m.)
Short – 50.27%
Long – 49.73%
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