Heads up, gold bulls!
If you think the precious metal’s uptrend is about to resume soon, better keep your eyes locked on this resistance-turned-support area.
Do you think this ascending channel will stay intact?
Gold (XAU/USD): 1-hour
Don’t look now, but gold is inching closer to the bottom of its channel!
This happens to coincide with a former resistance zone that might hold as support around the $1,980 level.
But what are technical indicators saying?
So far, it’s looking mixed, as the moving averages are pointing to a continuation of the uptrend while Stochastic is reflecting exhaustion among buyers.
Then again, the commodity price has some room to head south before actually testing the area of interest, so a return in bearish pressure might just be enough to take it there.
If the channel bottom holds, XAU/USD could recover to the top of the channel at $2,040 or at least until the middle around $2,010.
We’ve got a bunch of top-tier U.S. catalysts to look out for this week, including the CPI and retail sales reports, as well as the FOMC meeting minutes.
Now gold typically moves against the dollar and is treated as a hedge against inflation, so any downside for the U.S. currency stemming from weak data could translate to upside for the precious metal.
Don’t forget that analysts are projecting a slowdown in price pressures and consumer spending for March while the FOMC minutes would likely contain the recent concerns about the banking sector.
Better keep your eyes peeled for a move back above the mid-channel area of interest since this would suggest an early pickup in bullish momentum!