- Summary:
- After rallying yesterday, gold price is testing a critical resistance level in today's trading. Can the precious metal extend its gains?
Gold price rallied in yesterday’s trading after US GDP came in lower than expected. XAUUSD closed higher at $1,717.75 after opening at $1,710.28.
According to the Bureau of Economic Analysis, the US GDP contracted by 5.0% in the first quarter of 2020. This was more than what analysts had predicted at -4.8% which consequently weakened the US dollar. Further fueling the dollar’s weakness was the unemployment claims report which printed at 2.123 million and topped the 2.1 million forecast.
On the brighter side of things, durable goods orders only contracted by 17.2% versus the 19% consensus. Meanwhile, core durable goods orders only dropped by 7.4% which was lower than the 14.8% contraction that was estimated.
Now the big question is, can gold price extend its gains?
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Gold Price Outlook
On the 4-hour time frame, it can be seen that gold price is testing a confluence of resistance. For one, by connecting the highs of May 18, May 20, May 26, and May 28, it can be seen that XAUUSD is trading around the trendline resistance. This price, around $1,719.30, also corresponds to the area between the 50% and 61.8% Fib levels when you draw the Fibonacci retracement tool from the high of May 22 to the low of May 27. Additionally, this price also corresponds to the 100 SMA.
If there are enough sellers around this area, we could soon see gold price fall to its May 27 lows around $1,693.50. On the other hand, a strong bullish close above the high of May 28 at $1,727.29 could mean that there are still enough buyers in the market that could push gold price to its May 20 highs at $1,753.28.