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.
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.
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