Gold Prices
Gold price is trading lower early in today’s Asian session as traders square their positions ahead of the weekend. As of this writing, XAUUSD is trading at $1,723.84, down from where it opened at $1,730.17.
Yesterday’s gold price benefitted from the slew of worse-than-expected economic data from the US. Unemployment claims for the previous week came in at over 4.42 million which was more than the expected reading of 4.35 million. Meanwhile, new home sales were only at 627,000 and disappointed the 643,000. The services PMI for April also fell short of expectations at 27.0 versus the 30.5 consensus. Only the flash manufacturing PMI report topped forecasts when it came in at 36.9, higher than the anticipated 35.1 reading.
After a strong rally like yesterday’s, it is not unusual for a market to recoup some of its gains. This is because some investors take profit from their positions especially as the markets close for the weekend.
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On the 1-hour time frame, it can be seen that gold price is trading below the rising trend line (from connecting the lows of April 21 and April 22). This could suggest that sellers are dominating the market and could push XAUUSD lower. Near-term support is at $1,702.33 where the 61.8% Fib level is (when drawing the Fibonacci retracement tool from the low of April 22 to the high of April 23). This area also seems to coincide with the 100 SMA and 200 SMA.
Zooming in to the 15-minute chart, a head and shoulders pattern on XAUUSD has formed. This is characterized by lower highs made by the commodity after a series of higher highs. As of this writing, gold price is trading around the neckline support at $1,724.40. A strong close below the current Asian session lows at $1,720.72 could trigger a sell-off.
On the other hand, a bullish close above $1,734.46 would invalidate this bearish reversal pattern. It could indicate that there are still enough buyers in the market. Should this happen, we could see gold price trade higher to yesterday’s highs at $1,738.48. If resistance does not hold, the next ceiling could be at $1,746.93 where XAUUSD topped on April 14.