Technical analysis of XAUUSD
Gold has held since yesterday’s open near areas familiar from the end of last week as the dollar remains fairly weak but shares around the world have generally made some gains. Yesterday’s larger than expected increase in Chinese exports has helped to drive risk appetite higher. This technical analysis of XAUUSD looks at the four-hour chart plus the chart of futures and annual data for futures on the yellow metal.
High resistance for gold remains the latest all-time high around $2,072, while a more immediate area of focus on this timeframe is the psychological zone around $2,000. The primary support here seems to be the lower psychological area around $1,900.
Technical indicators on XAUUSD H4
Moving averages give a weak sell signal, with each of the 50, 100 and 200 SMAs successively above slower lines but very close together. The death cross of the 100 and 200 SMAs is visible at the very start of September last week. The main focus from moving averages in the near future is likely to be the value area between the 100 and 200 SMAs.
There’s currently no indication of saturation from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5). The latter at about 37 is slightly closer to neutral than oversold. Several spikes in buying volume have occurred since the start of August, most notably on 27 August during Dr Jerome Powell’s opening comments at the virtual Jackson Hole symposium.
Price action and Fibonacci
Price action generally indicates reluctance to move outside the range between $1,900 and $2,000. We can observe fairly sudden retracements whenever these areas were tested during most of August. Gold has been more-or-less static on this timeframe in September so far, especially compared to the clear trending movements of the second quarter of 2020.
The 23.6% daily Fibonacci retracement area is the clearest resistance from Fibonacci, coming not far below $2,000. This was the upper limit of the sudden gains in the afternoon GMT of 27 August. To the downside, the 38.2% daily Fibonacci retracement is also a significant zone of support which price is currently testing. If this test fails, the 61.8% line from the daily fan might be more prominent as immediate support in the second half of the week.
Futures on gold
The picture from futures (COMEX, continuous with current contract at front) is basically similar to that of the spot CFD on gold-dollar. We can observe much the same recent movements, notably the high short-term volatility on 27 August. The main difference on this chart is much higher volume of selling, to the tune of more selling than buying in September so far, the opposite of the situation for the spot CFD. This could indicate a downward movement by gold over the next few days.
Annual futures on the NYMEX display a small contango, basically a normal situation for commodities. The 14-month difference is now about 2.5%, suggesting that the information available to participants has been priced in and calling into question the signal from volumes on the chart of futures above.
The next important news that might cause a readjustment of the prices here is American annual inflation and annual core inflation at 12.30 GMT on Friday. Other fundamentals to be watched include the inverse correlation with the dollar and of course sentiment based on economic recovery and major stock markets.
Technical analysis of XAUUSD: summary
The technical picture for gold is overall slightly negative but there’s no indication at the time of writing of a break below $1,900. How the current test of the 38.2% daily Fibonacci retracement area resolves is likely to be of critical importance for the next few days’ trading.
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