Where Did You Gold? – Gold Bears Are Tightening Their Grip

The bulls continue to lose their grip as XAU/USD slips further. At the time of writing, the price has taken a rather sharp dip to $1,712.30. The bearish indication is also supported by the fact that the price is moving below its 10-day and 50-day Simple Moving Average (SMA), which is represented by the blue and purple lines, respectively.

The Moving Average Convergence Divergence (MACD) is also pointing towards a bearish trend. Meanwhile, the Relative Strength Index (RSI) has taken a sharp dive downwards. It currently sits at 38, which is close to an oversold condition. At present, the price of spot gold is $1,729.17. 

Source: Yahoo Finance

In his recent article published on Market Pulse yesterday, Jeffrey Halley, a senior market analyst at Oanda, believes that the next support for the bears to conquer is at $1,680, which is the 61.80% March to August Fibonacci levels and followed by $1,600. Meanwhile, for the bulls, key resistance lies at $1,760.

In the broader market, the tug of war between gold and USD continues. The greenback recently gained some strength as the U.S. Federal Reserve (Fed) downplayed concerns about inflation and increasing U.S. Treasury yields. With no signals from the Fed on further easing of monetary conditions, this would then benefit the USD.

Meanwhile, the recent Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) came in at 60.8 against a forecast of 58.6, while the Markit Manufacturing PMI also exceeded the forecast when it came in at 58.6 versus at forecast of 58.5.

The safe-haven gold must war against an increasing risk-on sentiment in the market, and for the next few days, key upcoming data surrounds the labour market. Traders will be watching out for the ADP Employment Change report, the latest initial jobless claims, as well as the nonfarm payrolls. Positive reports from the above indicating a recovering labour market could then lure traders away from the yellow metal.

Gold could also lose attention if the Biden Stimulus Package makes further progress, as the $1.9 trillion stimulus package is deemed as a driver of U.S. economic recovery.

While the market is closely watching to pick up clues on economic recovery, could the shine of gold be losing its lustre at the prospect of a return to normal?

XAU/USD (as of Mar 2, 2021, 10.40 a.m., GMT +8) - $1,712.30

FOLLOWME XAU/USD User Sentiment (as of Mar 2, 2021 at 11 a.m.)

Short – 46.00%

Long – 54.00%