Where Did You Gold? –Gold Bulls Are Marching On

After trading sideways for a while, XAUUSD is beginning to move upwards and currently stands at $1,725.50. In response to that, the Relative Strength Index (RSI) is indicating buyers’ appetite as reflected by its upward momentum and it currently stands at 67. Meanwhile, the Moving Average Convergence Divergence (MACD) is showing a bullish trend. Currently, the price of spot gold is $1,733.46.

According to analyst Anil Panchal from FX Street, the bulls must overcome resistances at $1,765, which is the low from Nov 2020. Meanwhile, the bears will face support at around $1,675.

Meanwhile, an inverse head and shoulders breakout has been observed on the 15-minute chart, reported analyst Omkar Godbole from FX Street, which indicates a bullish reversal pattern. However, Godbole further cautions that if the price dips below the former hurdle-turned support of the pattern, the bullish trend will not hold. 

Source: Yahoo Finance

Meanwhile, the Biden Stimulus Package has cleared the U.S. House and is on the way to President Biden, to be signed into law. The final hurdle was overcome with a narrow 220 to 211 votes in the U.S. House. The $1.9 trillion stimulus package is expected to further drive economic recovery in the U.S. However, there are also concerns about rising inflation from an overstimulation of the economy.

The U.S. Consumer Price Index (CPI) came in at 1.7% y-o-y, on par with the forecast. On a monthly basis, it increased 0.4%. With the U.S. 10-year Treasury yields rising above 1.6% this week, concerns of inflation rise are rife in the market. The chart below depicts the gradual increase in inflation in the U.S.

Source: Labour Department via the St. Louis Federal Reserve

Market Watch reported on Mar 10 that there are economists who forecast that the U.S. inflation could hit 2.3% by mid-year on the back of economic recovery. Concerns over inflation could then support the cause of the gold bulls, with the yellow metal’s reputation as a hedge against inflation.

Meanwhile, traders would also be keeping an eye out for the release of this week’s U.S. initial jobless claims as well as updates from the European Central Bank (ECB) meeting. 

XAU/USD (as of Mar 11, 2021, 10.15 a.m., GMT +8) - $1,725.50

FOLLOWME XAU/USD User Sentiment (as of Mar 11, 2021 at 11.05 a.m.)

Short – 51.53%

Long – 48.47%