Baron Learning Blog

From a technical perspective, a sustained break and acceptance below the 50-day SMA, currently around the $1,856 region, will be seen as a fresh trigger for bearish traders. The gold price could then accelerate the fall towards the next relevant support near the $1,830 area en route to the $1,818-$1,817 zone and the $1,800 round figure.

On the flip side, any subsequent move up is likely to confront stiff resistance near the $1,875 region. This is followed by the $1,900 round-figure mark. The latter should act as a pivotal point, above which a bout of a short-covering could lift the Gold price to the $1,925-$1,930 congestion zone.

Having witnessed a fakeout to the upside from a rising wedge formation on Tuesday, bears took charge and triggered a corrective decline in the Gold price on Friday.

In doing so, Gold price closed the day below the lower boundary of the wedge, then at $1,940, validating a rising wedge breakdown. The natural tendency of the rising wedge is usually to yield a downside break, which eventually materialized on the United States Gross Domestic Product release.

Gold sellers need to crack a strong support near $1,918 to challenge the weekly low at $1,911. Should the correction deepen in the Gold price, the $1,900 round level could be put at risk.

With, the 14-day Relative Strength Index (RSI), however, in the positive territory above the midline, Gold price still remains a good buying opportunity on pullbacks.

On the upside, powerful resistance near the $1,950 psychological barrier remains a tough nut to crack for Gold bulls. Ahead of that, Gold price needs to find acceptance back above the $1,940 round figure.

A firm break above the $1,950 hurdle will call for a test of the next resistance placed around April 20 2022 highs near $1,958.

The daily chart for the XAU/USD pair favors a bullish continuation, but the price is currently facing resistance around the $1,935 zone. The pair topped last week at $1,937.47. The metal needs to consolidate above $1,935.00 to open the door to an upward extension. Technical indicators in the mentioned time frame remain within overbought readings. The RSI is moving south, about to slide below 70. The 20-day Simple Moving Average (SMA) heads firmly north, far below the current level but above the longer ones at around $1,869.40.

For the near term, and according to the 4-hour chart, XAU/USD is slightly biased to the downside. The rebound from $1,910 took Gold back above the 20-SMA in the mentioned chart ($1,920) avoiding a deterioration in the technical outlook. If it drops back below it, attention would turn to $1,912, the last strong defence before the critical $1,900.

The XAU/USD pair trades flat for the day, with no signs of giving up further ground. The daily chart shows that technical indicators corrected extreme overbought readings before turning flat well into positive territory without signaling more weakness ahead. At the same time, the 20 SMA heads north almost vertically, far below the current level while above the longer ones, reflecting buyers' strength.

The 4-hour chart suggests the pair could fall further in the near term. It was unable to sustain gains above a mildly bullish 20 SMA and is back below the indicator, although still far above a bullish 100 SMA, currently at around $1,858.15. Finally, technical indicators turned south and pierced their midlines, maintaining their firmly bearish slopes within neutral levels. A break below the daily low at $1,890.54 could see the current corrective decline extending towards the $1,850 region.