Gold Price Muted But Technicals Suggest A BIG Move Could Be Ahead

Gold prices
Gold prices

Unlike crude oil, volatility on gold price has been relatively muted. On the fundamental side of things this could be explained by investors seemingly accepting the coronavirus pandemic as a new way of life. Markets are no longer reactive to rising cases or the death toll.

The Bearish Argument for XAUUSD

With this, XAUUSD has been trading within a few cents from where it closed last week’s trading around $1,684.00. The weekly time frame reveals that the commodity formed a shooting star. Because this materialized at last week’s highs, it suggests that sellers may soon push gold price lower.

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The 4-hour time frame also paints a bearish picture of the commodity. XAUUSD has recently formed lower highs after a series of higher highs. Consequently, a head and shoulders chart pattern has formed. As of this writing, gold price is trading slightly above the neckline support around $1,678.20. A strong bearish close below today’s low at $1,659.44 is needed in order to trigger a bigger move lower. Should this happen, we could see gold price fall to its March 31 lows at $1,575.00.

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Don’t Get Too Excited Selling Gold Just Yet

On the other hand, it’s worth mentioning that the Fibonacci setup I pointed out on the daily timeframe of XAUUSD yesterday is still valid. Yesterday’s candlestick closed as a hammer. This candlestick is widely considered as a bullish confirmation signal. And so, a close above yesterday’s highs at $1,697.60 could indicate that there may still be buyers in the market. Near-term resistance for XAUUSD would be at $1,746.93 where it topped on April 14.More content