Gold gains as rising COVID-19 cases, easing U.S. dollar boost appeal
· Gold prices gained on Monday as rising coronavirus cases boosted the metal’s safe-haven appeal, supported by a weaker dollar as investors await this week’s U.S. Federal Reserve meeting, while auto-catalyst palladium was little changed after scaling historic highs last week.
· Spot gold was up 0.3% at $1,781.97 per ounce by 0343 GMT. U.S. gold futures rose 0.2% to $$1,781.90 per ounce.
· “The COVID-19 situation in India and Japan is deteriorating. So that is boiling demand for safety, resulting in higher gold prices,” said Margaret Yang, a strategist at DailyFX, adding that an easing dollar is further supporting prices.
· Cases in India registered a record surge, while Japan declared states of emergency for Tokyo, Osaka and two other prefectures on Friday to combat a spike.
· Speculators raised their bullish positions in COMEX gold in the week to April 20, the U.S. Commodity Futures Trading Commission said on Friday.
· “On the other hand, investors are looking at very strong U.S. economic data released on Friday,” said Yang, adding higher yields are capping gold’s gains.
· U.S. factory activity powered ahead in early April, while retail sales jumped to a record high in March and hiring accelerated.
· Market participants now await Fed’s two-day policy meeting starting on Tuesday. Although no change in policy is expected, the focus will be on Chair Jerome Powell’s press conference.
· In other metals, palladium was up 0.1% at $2,858.76 per ounce, after scaling a record peak of $2,925.14 on Friday.
· “Strong industrial demand from the auto sector and investor interest saw palladium trade to a fresh record high... underpinned by Nornickel’s lacklustre output numbers and continued strong demand from tightening emissions standards,” said independent analyst Robin Bhar in a note.
· Spot gold may retest resistance at $1,792
Chances are it could resume its rally towards the upper channel line around $1,828.
Spot gold may retest a resistance at $1,792 per ounce, as it has stabilized around a support at $1,772.
The support is around the lower channel line. It suggests a continuation of the uptrend from $1,677.70. The trend may consist of five waves.
The fifth wave labelled e is unfolding towards $1,803. A break below $1,772 could open the way towards $1,753-$1,763 range. On the daily chart, the metal managed to hover above a support at $1,776.
A drop below the April 23 low of $1,769.63 could not only open the way towards $1,723-$1,752 range, but also signal a completion of the bounce from $1,676.10.
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· Gold Price Analysis: XAU/USD to struggle at $1,800 ahead of Wednesday's Fed decision
A pickup in the US bond yields dragged gold lower for the second straight session on Friday. On the first day of a new week, sustained USD selling bias assisted the yellow metal to regain traction. Investors eye US Durable Goods Orders for some impetus ahead of the FOMC policy meeting, FXStreet’s Haresh Menghani briefs.
$1,800 might continue to cap ahead of FOMC on Wednesday
“The view that any spike in inflation is likely to be transitory and that the Fed will keep interest rates lower for a longer period extended some support to the dollar-denominated commodity and helped limit any deeper losses, rather assisted to regain some positive traction on the first day of a new trading week. That said, the upside is likely to remain capped as investors might prefer to wait on the sidelines ahead of the latest FOMC monetary policy update, scheduled to be announced on Wednesday.”
“Monday's release of the US Durable Goods Orders might influence the USD price dynamics and provide some impetus later during the early North American session. Apart from this, the US bond yields and the broader market risk sentiment might also contribute to produce some meaningful opportunities around the XAU/USD.”
“Repeated failures near the $1,800 mark warrant some caution before positioning for any further appreciating move. Hence, it will be prudent to wait for a sustained move beyond the mentioned handle before placing fresh bullish bets. Gold might then accelerate the move towards the $1,815-16 resistance, marking the 50% Fibonacci level of the $1,959-$1,676 downfall.”
“The double-bottom neckline resistance breakpoint, around the $1,765-60 region now seems to protect the immediate downside. This is followed by the 23.6% Fibo. level, around the $1,745-44 area and the $1,730 level, which if broken decisively might negate the positive outlook. The XAU/USD might then turn vulnerable and accelerate the fall towards challenging the $1,700 round-figure mark.”
· Gold Price Analysis: XAU/USD confronts 100-HMA barrier, as $1800 beckons once again
From a near-term technical perspective, gold bulls will extend control on a sustained break above the 100-hourly moving average (HMA) at $1783, which now acts as a powerful resistance.
The next stop for the buyers is seen at the mildly bearish 50-HMA of $1785. Further up, a critical upside barrier around $1798 will be back in play.
That level is the confluence of Friday’s high and two-month highs.
The Relative Strength Index (RSI) has turned flat but holds just above the midline, favoring the bullish traders.
To the downside, if the 21-HMA support at $1780 fails to offer any cushion, the spot could fall back towards the daily lows of $1775.
Further south, the intersection of the ascending 200-HMA and Friday’s low around $1770 could be the last line of defense for the optimists
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· Gold Price Analysis: XAU/USD to underpin bullish bias on a break above $1,800
· “Palladium has been in deficit for several years and this is set to continue over coming years.”
· Silver rose 0.2% to $26.04 per ounce. Platinum was up 0.4% at $1,234.42.
Reference: CNBC, Business Recorder, FXStreet
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