· Gold Price Analysis: XAU/USD’s acceptance above $1815 strong cap is critical for further recovery – Confluence Detector
Gold: Key levels to watch
The Technical Confluences Indicator shows that the XAU/USD pair faces powerful resistance around $1813/1815 levels, which is the convergence of the Fibonacci 23.6% one-month, SMA10 one-hour and Fibonacci 38.2% one-week.
Recapturing the latter is critical to reviving the recovery momentum from the multi-month trough. The next crucial hurdle is seen at $1818, where the previous day high coincides with the SMA50 four-hour.
The bulls could then aim for the $1825 resistance, which is the SMA10 one-day. Further north, the Pivot Point one-day R1 at $1829.
Alternatively, immediate support awaits at $1807, which the Fibonacci 23.6% one-day, below which a dense cluster of supports is aligned around $1803. At that level, the Fibonacci 38.2% one-day and SMA200 one-day intersect.
The next fierce support is seen at $1800, which is the confluence of the SMA5 one-day and Fibonacci 23.6% one-week.
A breach of the last could trigger a fresh sell-off towards $1791, the meeting point of the Fibonacci 61.8% one-day and SMA50 one-hour.
· Gold Price Analysis: XAU/USD eyes $1850 amid bull pennant breakout on 1H chart
Gold’s recovery from five-month lows of $1765 gains further traction on Wednesday, as the bulls gear up for a test of the earlier critical support now resistance at $1850.
The technical set up favors the bulls, as the price confirmed a bull pennant breakout on the hourly chart in the last hour. The validation came in after the metal gave an hourly closing above the falling trendline resistance at $1815.
The price pierced above the 200-hourly moving average (HMA) at $1819, offering extra zest to the XAU bulls after the big breakout.
The hourly Relative Strength Index (RSI) marches into the overbought territory, currently at 74.05, implying that the price could reverse to test the 200-HMA before resuming its upward journey towards the $1850 level.
A breach of the 200-HMA could expose the pattern resistance now support at $1815. The next downside target for the bears is seen at the bullish 21-HMA at $1812.
The recovery momentum remains intact so long as the precious metal holds above the $1800 level.
· US and Russia accumulated the most gold amid the pandemic at 157 tons
The economic crisis by the coronavirus pandemic has seen some countries liquidate or top up their gold reserves. Data acquired and calculated by Finbold.com indicates that four of the top 12 countries with the highest gold reserves cumulatively added 208.34 tons of gold between March and December 2020. The remaining eight countries cumulatively liquidated 12.78 tons of gold during the same period.
The United States, which holds the highest reserves, added 92.23 tons, increasing its haul to 9,057.38 tons from 8,965.15 tons held in March. Germany follows a distant second with 3,703.74 tons of gold having liquidated 5.4 tons from March’s 3,709.14 tons. The International Monetary Fund gold reserves are at 3,100.38 tons while back in March the figure stood at 3,101.53 tons. The institution has liquidated a total of 1.1 tons of gold.
Currently, Russia holds 2,569.72 tons in gold reserves, an addition of 65.51 tons on the 2,504.21 tons held in March. China has upped its reserves by 36.75 tons to 2,196.55 tons as of December 2020. In March, the figure stood at 2,159.8 tons.
Central banks leverage on gold’s safe-haven status
From the data, leading gold holders increased their reserves to act as a cushion during the coronavirus pandemic crisis. The wide-scale lockdowns led to the closure of many economies as people remained at home. The stock market crashed to historical lows leaving central banks to accumulate more gold as an alternative source of wealth.
In general, the economic crisis caused by the pandemic created an uncertain outlook that also affects gold. Different economies have begun recovering, with the stock market hitting new all-time highs. Although the gains are still under threat from a second wave coronavirus, the possibility of a vaccine in the coming days has acted as a major booster.
It is worth mentioning that when the pandemic hit, most countries began a new dash towards gold. The dash came in the backdrop of central banks printing massive amounts of money to stimulate the global economy. Notably, gold continues to have an intrinsic value reassuring countries of good returns in case of heightened inflation.
Notably, some countries liquidated their reserves to boost their cash reserves. Central banks took advantage of the high gold prices. Selling the gold resulted in more cash especially for countries that were hard hit by the pandemic.
Impact of pandemic on gold not clear
Despite central banks turning to Gold as a haven, there have been concerns about the precious metal. In the course of the pandemic, gold prices fell, especially during heavy risk-off sessions. This prompted worries among economists about gold’s haven status. Many still don’t understand why it lost value in the course of economic turmoil.
Despite the setback, central banks understand gold’s strategic value and resilience. The metal’s performance in recent times highlights the benefits of these attributes.
Reference: Finbold.com, FXStreet
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