Where Did You Gold? – Key Resistance Next for Gold Bulls, Next Mover: Second Part of Powell's Testimony

Despite a rather sharp decline below $1,800, the gold bulls have managed to move the price upwards again, but it remained slightly volatile thereafter. Following that bout of volatility, the price has been pretty much moving sideways, but at present, a slight momentum has been appearing and the price currently stands at $1,811.90. It is trading above its 10-day and 50-day Simple Moving Average (SMA), which is represented by the yellow and purple lines in the chart below, respectively. The Relative Strength Index (RSI) currently stands at 69, with no drastic movements in recent hours. Meanwhile, the current price of spot gold is $1,817.99. 

Source: Yahoo Finance

The gold bulls have to face a battle soon. They are presently close to a key resistance level which around $1,813, a downward sloping trend line from Jan 6, as reported by analyst Anil Panchal from FX Street. Following that, the next resistance is at $1,818, which is a 21-day Simple Moving Average (SMA) level. In the meantime, a key support level lies at $1,785.

Meanwhile, the markets paid attention yesterday as the chairman of the U.S. Federal Reserve (Fed), Jerome Powell testified before the U.S. Senate Banking Committee. In his recent statement, Powell implied a further increase in inflation. He also commented that time is needed for ‘substantial further progress’ relating to the Fed’s goals on employment and inflation. Reuters reported on Feb 23 that there was a nominal market reaction to Powell's statement except for a sharp rise in Treasury bond yields over concerns of rising inflation and a sooner-than-expected tightening of the monetary policy. However, traders would likely be watching out for the second part of Powell’s testimony.

Meanwhile, on the vaccine front, a Scotland study has shown that the vaccine from AstraZeneca is successful in reducing Covid-19 hospitalisation risk by 94%. This is indeed cheerful news amidst concerns of new variants emerging.

Another key factor to impact the risk sentiment in the market would be the progress of the Biden Stimulus Package. The U.S. House of Representatives will be taking a vote this Friday, Feb 26. Would a successful outcome from the vote be able to steer the risk sentiment that is gradually becoming cautious?

The fate of the gold bulls currently hangs on the balance on account of these several factors. Can the gold bulls successfully push through the next key resistance? Let’s keep a close watch here.

XAU/USD (as of Feb 24, 2021, 11 a.m., GMT +8) - $1,811.90

FOLLOWME XAU/USD User Sentiment (as of Feb 24, 2021 at 11.40 a.m.)

Short – 52.30%

Long – 47.70%