Where Did You Gold? – Gold Bulls Struggle to Strongly Stake Their Claim

Although gold plunged from $1,808.70 to slightly above $1,780, it has since managed to climb back upwards. At the time of writing, the price stands at $1,803.10 and trading above its 10-day and 50-day Simple Moving Average (SMA), indicated by the yellow and purple lines, respectively.

The current Relative Strength Index (RSI) has taken a dip from an overbought condition and is currently standing at 58. The volatility from the struggle between the bulls and the bears is also depicted in the Moving Average Convergence Divergence. At present, the price of spot gold is $1,810.11. 

Source: Yahoo Finance

So, what lies next for gold? Can the bulls hold unto the reins, or will the bears show their power? According to analyst Anil Panchal from FX Street, gold’s downward traction to $1,796, represented by the 100-Hull Moving Average (HMA) is imminent. However, the bears would need to face an ascending support line from Feb 19 which is at $1,786 at the time of reporting.

However, this can be overturned if the bulls successfully conquer the resistance at $1,805, which is the 50-HMA level. Should that endeavour be successful, the next resistance levels can be found at $1,807, $1,816, and the Feb 10 high of $1,855.

Over in the market, the Chairman of the U.S. Federal Reserve (Fed), Jerome Powell, continues the second part of his testimony, this time before the House of Representatives Financial Services Committee. Powell reiterated the Fed’s commitment to restore full employment back into the economy, while provided reassurances that there is nothing to worry about inflation unless a dramatic and concerning rising in prices are observed. At present moment, it seems that the Fed will not be tightening its monetary policy anytime soon until the employment rate stabilises. 

In the meantime, the latest U.S. new home sales showed positive progress when it came in at 923,000 against a forecast of 885,000.

An upcoming key market mover lies in the $1.9 trillion Biden Stimulus Package space. After having passed through the U.S. House Budget Committee on Monday, it is now set for a full house vote on Friday.

If it is passed by the House, it can then advance to the Senate. Democrats are eager to move this on quickly, as the gigantic stimulus package is seen as much-needed relief to further resuscitate the U.S. economy.

Should this happen, this could increase the risk-on sentiment in the market, and what would this mean for safe-haven gold when the market deems that it does not need a safety net anymore?

Till then, if the gold bulls want to stay, they must brace for a tougher fight to stake their claim.

XAU/USD (as of Feb 25, 2021, 10.45 a.m., GMT +8) - $1,803.10

FOLLOWME XAU/USD User Sentiment (as of Feb 25, 2021 at 11.20 a.m.)

Short – 49.71%

Long – 50.29%

#BidenStimulus#