XAUUSD Gold Report for the Investors: April 01-05
Warning: This article is the shortened version of our Gold Report prepared for our investors. Intraday traders may not get any benefit of this article.
We have a heavy data week ahead.
As I have mentioned in my previous Global Report, U.S. Treasury 10-year note yields last Friday fell below three-month Treasury bill yields for the first time since 2007. Some analysts took it as a sign of an upcoming U.S recession. My view was clear: “Not in 2019 – Maybe 4th Q of 2020”
Analysts in Treasury Departments and traders in Bond Markets turned in to a “Switch Off” mode.
Market players do not expect a U.S. recession any time soon. But they are seeking confirmation for this optimism in next week’s data, which includes retail sales, manufacturing activity, durable goods orders and non-farm payrolls.
February’s U.S. retail sales data, due on Monday, and the March jobs report, scheduled for Friday, may be the most closely watched indicators as economists want reassurance on the spending power and confidence of U.S. consumers, which represent about 70 %of the U.S. economy.
January retail sales rose a modest 0.2% after a December decline but were not seen as strong enough to alter slowing U.S. economic momentum. Economists, on average, expect a February increase of 0.3 %
But, to summarise, U.S.-China tensions could mute market reactions to data “unless it’s so far off to the upside or the downside.
What about Gold Prices?
I will just “copy & paste” from my previous reports released in March.
“Not only U.S data support Dollar and weight on Gold, but brewing problems in the Eurozone will also provide further support for the Dollar.”
“One big problem for Gold in the near future can be global inflation. We have a structural low inflation problem. I have pointed out that problem in my latest Gold report. If inflation weakens in the U.S., real interest rates will be very attractive and that would weigh on Gold.”
“What could drive Gold prices higher? Because XAUUSD needs a catalyst to go higher
Changes in the trade-weighted US Dollar. Weak USD. / Not yet
Negative interest rates / No
Changes in nominal yields on10-year U.S. Treasuries / Not supportive for Gold at the time being
US Economic Data / Not too weak to support gold prices.
Supply and demand / Physical demand is not too strong at the time being.
Global Uncertainty / Even Friday’s UK MP decision could not help XAUUSD to go higher”
“The focus would be the yield curve, not DXY: If the bond yields push lower, it would help the gold to rally. If the recession concerns continue to grow, we could see a bigger demand for gold.”
And now… where we are… at the beginning of April?
Leave everything aside. Simply saying: USD is the safe haven at the time being. This fact is driving the Gold prices.
As long as these variables remain intact, we would not be able to see a sustainable Gold rally.
Let us combine fundamentals with technicals:
As you know I am a Gold Bull. But Gold needs time.
It is very difficult to understand the “analysts” who keep telling “Gold is in a Bull Market”. Gold has been trading in a Bear Market since 2013. The weekly chart is quite clear for the one who knows how to read a technical chart
XAUUSD needs to make a weekly closing above $1.370 in order to speak about a “Bull Market” What do we need to see Gold prices above $1.370?
- Safe Haven Demand ( Global Crisis, Uncertainties etc )
- Strong Physical Demand
- Negative Dollar interest ( High inflation or FED Rate Cut minimum 150 Base Points – Please note that the market is currently pricing 42% probability of one rate cut in 2020 – Bloomberg )
So under the current fundamental conditions, I do not see any reason for Gold to enter a Bull Market.
Gold Bulls ( I was one of them) made several attempts to break $ 1.370 resistance last five years. Every breakout attempt was failed.
The rising trendline has been broken at $1.269 – keep this level in your mind because we will see it on the H4 Chart – in June 2018. And the broken line has been retested a few weeks ago. However, XAUUSD failed to close above $1.328 and moved down below $1.300.
When looking at the chart with four eyes, we can see an emerging Inverse Head And Shoulders pattern. The left shoulder resides in $1.247 where it meets SAM 200 Daily Chart and Fibonacci 61.8% retracement of CD move as seen on the below Daily Chart.
Our latest main trade started selling gold at $1.347, $1.328 and $1.308 ( Bearish Flag). XAUUSD ended the week below EMA 50 on Daily Chart.
The measured move target of the Flag Pattern is $1.247 and it meets SMA200. ( I m not telling that the price will drop towards $1.247 but trying to read the charts )
$1.277 remains as the key support where it meets SMA100 on the Daily Chart. A potential breakout of $1.277 could accelerate the bearish move. However, we have strong support at $1.269 below $1.277. Why?
After breaking 1.308 ( We added short there ) the price tested 1.286 which was our third target. Friday, I have published a bullish pattern with day trading purposes and we reached our targets as well. And we sold it in the trading room after better than expected Home Sales data. (
Even Brexit could not help Gold’s recovery on Friday which is proving that the Dollar is still the safe haven.
H4 Chart technical indicators readings are not positive for Gold near term. The price is below Ichimoku Cloud and the worse news is the Death Cross of EMA 50, 100 and 200. Until we see a firm closing above $1.312, we can not speak about a near term trend change from bearish to bullish.
1.277 is the key support. If the prices break below $1.277, we will focus on $ 1.268 where Gold Prices broke the rising trendline in 2018. A bullish three drives pattern would be completed at $1.268 which can be used as a buying opportunity.
If XAUUSD succeeds to close above $1.312, it is likely to re-test $1.330 – $1.340.
Summary: Unfortunately I am still bearish. I will be focusing on $1.277 support and $1.312 resistance. I will add short if the price breaks below $1.277 ( Targets 1269 1250 1244 ) and I will buy if it closes above $1.312 ( Targets 1318 1325 1330 1347 )
Intraday trade setups will be published for the Chartreaderpro.com members as soon as we find a clear opportunity.
“Trading without technicals is like driving a car without brake
Trading without fundamentals is like driving a car in the dark with no headlights
Trading with emotions is “committing suicide” by M.H.
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