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Gold Weekly Forecast: XAU/USD shakes off bearish pressure, eyes $1,745

Gold started the week on the back foot and suffered heavy losses after it broke below the lower limit of its two-week-old range at $1,720. Following a two-day slump that saw XAU/USD lose more than 2% on its way to a three-week low of $1,678, the pair managed to stage a decisive rebound in the second half of the week. With US Treasury bond yields falling sharply and the USD struggling to find demand, gold erased all of its weekly losses and settled near $1,730.

This week will be relatively quiet with regards to significant macroeconomic events, hinting that the performance of US Treasury bond yields could continue to impact the USD's market valuation and XAU/USD's movements.

On Monday, the ISM Services PMI from the US will be looked upon for fresh impetus. A stronger-than-expected reading could provide a boost to Wall Street's main indexes and limit the USD's potential gains.

On Wednesday, the FOMC will publish the minutes of its March meeting and FOMC Chairman Jerome Powell will be delivering a speech on Thursday. The Federal Reserve's latest Summary of Projections showed that four policymakers were expecting a rate hike in 2022. Market participants will look for fresh clues regarding the possible timing of policy tightening.

 

·         $1,750 gold price is still key even as short-term sentiment improves

The latest Kitco News Weekly Gold Survey shows a fairly wide divide between Wall Street analysts and Main Street investors. Although gold has managed to bounce off last month's lows and end the shortened week above $1,700 an ounce, some analysts say that the true test is yet to come.

"Gold was knocked down fairly low this past week, so we are seeing a technical bounce," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "I don't see a lot of tailwinds for gold to really push prices back up into solidly bullish territory."

Cieszynski added that for him to become outright bullish on gold, prices would have to push back above $1,780 an ounce.

While Wall Street was significantly bullish on gold in the near term, many analysts see the current move as a short-term corrective bounce. Darin Newsom, president of Newsom Analysis, said that he is short-term bullish on gold, but he is waiting to see if resistance at $1,756.10 can be broken.

He added that gold continues to face tough competition with the U.S. dollar, which appears to be in a long-term uptrend.

Mark Leibovit, publisher of VR Metals/Resource Letter, said that he is also bullish on gold in the near term but warned that the correction isn't over.

Along with gold's technical bounce, Marc Chandler, chief market strategist at Bannockburn Global Forex, said that rising inflation data could drive investors to gold as a hedge against rising price pressures.

Clive Lambert, technical analyst at Futurestechs, said that the gold trend is still bearish but is improving.

"A double bottom buy signal will only be triggered if/when we take out the high between these two lows, so [we] need a move through $1,754.2," he said.

 

·         Dollar holds advantage as economic data point to more gains

The dollar was poised to extend gains against major currencies on Monday after the U.S. jobs report at the end of last week showed the nation’s labour market is recovering from the impact of the coronavirus shock.

The dollar was last quoted at 110.63yen, not far from its strongest level in a year.

Against the euro, the dollar traded at $1.1765, which is close to a five-month high.

The British pound held steady at $1.3824.

The dollar index against a basket of six major currencies was little changed at 92.973,

Dollar short positions in the currency market fell last week to the lowest since June last year, U.S. Commodity Futures Trading Commision data showed - another positive sign for the greenback.

 

·         Biden will push through infrastructure plan if no Republican support -energy secretary says

U.S. President Joe Biden would be willing to push through his $2 trillion infrastructure plan without the support of Republican lawmakers if he cannot reach a bipartisan deal, Energy Secretary Jennifer Granholm said on Sunday.

 

·         Jobs report blows past expectations as payrolls boom by 916,000 in March and an unemployment rate of 6%. The total was the highest since the 1.58 million added in August 2020.

 

·         Coronavirus Updates:

COVID-19 infections are still rising in 70 countries.

Global Cases: 131.89M (+526,450)
Global Deaths: 2.86M (+6,490)

No.1-3:

U.S. Cases: 31.42M (+36,983)
U.S. Deaths: 568,777

 

Brazil Cases: 12.98M (+31,359)
Brazil Deaths: 331,530 (+1,233)

 

India Cases: 12.58M (+103,793)
India Deaths: 165,132 (+477)

 

No. 116
Thailand Cases: 29,127 (+96)
Thailand Deaths: 95

 

·         New infections reported by region

Of every 100 infections last reported around the world, more than 37 were reported from countries in Asia and the Middle East.

·         India leads the world in the daily average number of new infections reported, accounting for one in every 8 infections reported worldwide each day

 

 

·         Canada crosses 1,000,000 reported COVID-19 infections

 

·         India’s Covid-19 cases are rising again and the country’s richest state is getting hit hard.

Maharashtra — home to India’s financial capital Mumbai — reported more than 248,000 new cases in just seven days, CNBC’s calculation of government data showed.

The country’s second most populous state accounted for 57% of all cases reported in India over the same period. Infection cases have been rising since mid-February, but fatality rate remains relatively low.

There are more than 580,000 total active cases in India, or about 4.78% of all positive cases, according to the health ministry’s daily update on Thursday. Five states — Maharashtra, Karnataka, Kerala, Chhattisgarh and Punjab — account for 78.9% of all active cases in India, with a majority of them in the western state of Maharashtra.

 

·         Global Vaccination

So far, at least 153 countries have begun vaccinating people for the coronavirus and have administered at least 648,864,000 doses of the vaccine.

 

·         U.S. puts J&J in charge of plant that botched COVID vaccine, removes AstraZeneca

The United States has put Johnson and Johnson in charge of a plant that ruined 15 million doses of its COVID-19 vaccine and has stopped British drugmaker AstraZeneca Plc from using the facility, a senior health official said on Saturday.

 

·         Australia to continue AstraZeneca vaccination despite blood clotting case

 

·         Europe’s stumbling vaccine rollout provides a lesson in EU politics

The European Union has had a bumpy Covid-19 vaccine rollout. The campaign has prompted complaints that regulators were too slow to approve the shots and led to a simmering tussle with AstraZeneca as the pharmaceutical giant repeatedly slashed its delivery commitments.

 

·         France cuts economic growth forecast to 5% amid lockdown

The French economy will expand by 5% in 2021, Economy Minister Bruno Le Maire said in a newspaper interview, as a third lockdown to tackle the coronavirus pandemic has prompted a downward revision in the previous government forecast for 6% growth.

 

·         Hong Kong bars incoming Singapore Airlines flights over Covid-19 case

Hong Kong has barred until mid-April incoming passenger flights from Singapore operated by Singapore Airlines, after an arriving passenger tested positive for Covid-19 infection.

Three passengers on the carrier’s March 31 flight also failed to comply with disease precautions, Hong Kong authorities said on Friday.

 

·         Colombia to extend COVID restrictions as cases rise

 

·         UK's Johnson to set out travel plans after vaccine programme takes off

 

·         Japan's ruling party executive signals chance of extra budget to combat COVID-19 pain

 

·         Thai households struggle with record debt, COVID-19 increases burden

 

·         Iran wants all sanctions lifted and rejects ‘step-by-step’ easing, state-owned media says

 

·         Oil prices slip after OPEC+ agree to ease output cuts

Oil prices edged down in early Asian trade on Monday after OPEC+ agreed last week to gradually ease some of its production cuts between May and July.

Brent crude futures for June fell 16 cents, or 0.2%, to $64.70 a barrel by 2351 GMT while U.S. West Texas Intermediate crude for May was at $61.32 a barrel, down 13 cents, or 0.2%.

Both contracts settled up more than $2 a barrel after the OPEC+ decision and on optimism about energy demand after U.S. President Joe Biden outlined a $2 trillion infrastructure spending plan.

Reference: CNBC, Reuters, Kitco, Worldometers