Daily Market Recap - Gold Weekly Outlook

Gold may be gearing itself to break above the key resistance at $1,750 in the coming week. The yellow metal enjoyed a decent start to the second quarter, prices gaining approximately 1 percent over the previous week closing at around $1,743.75 per ounce.

After the sharp correction in February following the rise in real rates, the price of gold stabilized in March. All the attention was on the Federal Reserve this week as markets digested the Feds wait and see approach expected to last until the end of the year.

“What was different this week was that the Fed seems convinced that we will have to wait until next year to be proven wrong on inflation. Prior to this, markets were trying to hedge as far as this inflation risk. Now, this will get pushed much further down the road,” said Oanda analyst Moya.

In consequence, investors are mainly turning to risky assets that benefit from the economic recovery as seen in the US treasury market where yields rose significantly over the past month.

However, the ounce of gold has now formed a reversal pattern: a double bottom around $1,670. Thus, prices are trying to break through $1,750 to regain height. The 50-period moving average is the last hurdle to unlock the upcoming bullish potential. If this key level fails, we should see a trading range phase between $1,750 and $1,670.

On the flip side, if the buyers manage to gain the psychological upper hand with a strong move above $1,750, the market could begin a bullish recovery. Traders may look towards entering conservative longs to test the run-up to the critical 1,750 level and gauge for any collapse in buying momentum. The immediate support should be felt along with the 20-day moving average just below the 1,738.50 marks.

(Chart Source: Tradingview 11.04.2021)

Chart analysis suggests a new leg up towards $1,790 and then $1,825. Furthermore, the yellow metal has been locked in a bearish channel since August 2020. A breakout to the upside would bode well and would reinforce our bullish scenario for the next few weeks.

R3 1,875.46

R2 1,820.00

R1 1,786.25

S1 1,738.50

S2 1,722.80

S3 1,680.00

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.