Gold Technical Analysis: Attempting to Maintain Gains

Mahmoud Abdallah

During the beginning of this week's trading, gold prices continued to rise, as investors sought to buy safe assets amid intense selling in global stock markets. Accordingly, the price of an ounce of gold moved to the level of 1845 dollars, which is stable near it at the time of writing the analysis. Escalating tensions between the United States and Russia over the Ukraine issue, and fears of monetary policy tightening by the Federal Reserve led to a sell-off in global equities.

The drop in US 10-year Treasury yields also contributed to the price of the yellow metal being higher. The US Treasury market was in mixed performance to start the trading week, as the 10-year bond yield fell 0.014% to 1.733%. The one-year bond yield rose 0.005% to 0.557%, while the 30-year yield rose 0.012% to 2.074%.

The US dollar rose ahead of the Federal Reserve's monetary policy meeting, and this reduced the pace of gold's rally. The dollar index, which rose to 96.13, later fell to 95.86, but remained somewhat higher in positive territory, gaining about 0.25%. The index is coming off a weekly gain of about 0.5% but is still down 0.1% on the year. The FOMC is scheduled to meet on Tuesday and Wednesday. Investors are waiting for clues on how quickly and by how much the US central bank will raise interest rates this year. Speculators who canceled bullish bets on the dollar at the fastest pace in more than 18 months are now losing the currency's rally ahead of the Fed's decision on Wednesday. As such, aggregate net-term speculative positions have fallen against its major peers by the most since June 2020, according to the latest data from the Commodity Futures Trading Commission.

 The US State Department announced Sunday evening that it will reduce staffing levels at the US Embassy in Kiev, Ukraine, starting with the departure of non-essential staff and family members. The Russian Foreign Ministry rejected British allegations that Russia was seeking to replace the Ukrainian government with a pro-Moscow administration.

According to the technical analysis of the pair: The state of cautious stability dominates the gold market until the reaction of the important and influential events and data passes this week. The price of gold is in a general trend that is still bullish, supported by stability above the psychological resistance of 1800 dollars an ounce. The recent gains have not yet moved the technical indicators to overbought levels, which allows them and the gains to extend upwards. The move may occur towards the overbought levels if the gold price moves towards the resistance levels of 1852, 1865 and 1885 dollars, respectively.

There will not be a shift in the general trend of gold according to the performance on the daily chart without moving towards the $1775 support, otherwise the trend will remain bullish. The gold price will be affected today by the level of the US dollar and the extent to which investors are willing to risk or not. The performance may remain in limited ranges until the US Federal Reserve announces an update on its monetary policy decisions this week.

Gold

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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