Where Did You Gold? – Gold Bulls Take a Stumble

After moving upwards for three days, gold has been on a decline since yesterday. However, it has now managed to pick up some steam to move above its 50-day Moving Average (MA), which is indicated by the purple line, and XAU/USD currently stands at $1,840.50.

In tandem, the Relative Strength Index (RSI) has also been gaining momentum as gold buyers took advantage of the dip. It has moved from a low of 26 spotted yesterday to its present 61. The Moving Average Convergence Divergence (MACD) indicates a bullish reversal.

Source: Yahoo Finance

However, analyst Anil Panchal believes that for the bulls to move higher, it must successfully overcome key resistances at $ 1,841, $1,862, and $1,875-76, which is the high achieved in late January. Meanwhile, towards the downside, key support levels standing in the way of the bears are at $1,800, $1,792, and $1,762. At present, the price of spot gold is at $1,843.87.

Edward Moya, a senior market analyst at OANDA, believes that with the reflation trade gaining a foothold, gold can stand to benefit from a weaker dollar. As President Biden’s $1.9 trillion stimulus package takes steady steps to overcome hurdles standing in the way, hopes of increasing spending within the U.S. economy is boosting expectations of economic recovery.

In the latest update, President Biden had a meeting with his Vice President, Kamala Harris, U.S. Treasury Secretary Janet Yellen and Chief Executive Officers (CEO) of JPMorgan Chase, Walmart, Lowe, Gap, and the Chamber of Commerce, where the stimulus package was discussed. After the meeting, President Biden commented that he supported the proposal from the House of Democrats to allow Americans earning $75,000 or less to receive the $1,400 stimulus cheques.

The President and his team of Democrats seem persistent to get the $1.9 trillion stimulus package approved, even in the face of Republican opposition and as good progress is made, hope is clearly increasing in the market. The positive sentiment is also supported by reports that the number of new cases declines in the U.S, further increasing hopes of things returning to normal soon.

In conclusion, the gold bulls still need to fight harder to gain a firm footing here, especially with threats of new Covid-19 variants rearing their ugly heads, which would then empower the bears. In the meantime, let’s continue watching this space.

XAU/USD (as of Feb 10, 2021, 10.55 a.m., GMT +8) - $1,840.50

FOLLOWME XAU/USD User Sentiment (as of Feb 10, 2021 at 11.35 a.m.)

Short – 53.31%

Long – 46.69%

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