Gold (XAU/USD) climbed higher in the early European session and is currently trading at the strong $1,700-$1,695 pivot level. The yellow metal has gotten some bullish support from the $1,670 region and is moving back to retest the 50-day moving average resistance. This uptick lacks any fundamental backing and is believed to be mainly as a result of a weak US dollar price action.
The greenback witnessed a strong bullish rally at the end of last week following a better-than-expected US monthly jobs report. A weakened USD price action was believed to be one of the key supports for the yellow metal, however, the prevalent risk-on market sentiment has capped any strong gains for gold.
The ever-growing optimism for a sharp V-shaped global economic recovery, coupled with the outlook that the worst of the pandemic has passed continues to fuel a risk-on mood in the market. This, consequently, is reducing the demand and safe-haven appeal of gold and is holding bulls from becoming aggressive.
Gold (XAU) Value Forecast — June 8
XAU/USD Major Bias: Sideways
Supply Levels: $1,700, $1,710, and $1,717
Demand Levels: $1,690, $1,677, and $1,670
Gold (XAU/USD) broke below our ascending trend-channel and proceeded to break our key support at $1,700 after Friday’s unemployment data showed better-than-expected results. This immediately put gold in a bearish light forcing it to break through many support levels. Thankfully, the $1,670 support remained unabashed and has served as a bounce for the price to approach the $1,700 level.
Bulls are now faced with the task of sending the gold price above that pivot line up to $1,710 at least before we can see any further gains. Failure to capture the $1,700-10 level in the coming hours could send the price back to the $1,670 key support. A break below that level could catalyze further declines.
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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.
