General analysis XAUUSD for 05.04.2022
Current dynamics
Gold is trading in a limited price range this week. 1915.00- 1940.00. The XAU/USD is holding above 1915.00 due to rising price pressure. In this regard, Investizo recommends paying attention to the oil market, which has essentially been the leading indicator for the metals market since the start of the special operation in Ukraine. According to investors, the rise in energy prices is the main catalyst for inflation in the world's major economies. At the moment gold has lost its "safe haven asset" status, at the same time a probable rise in oil prices will contribute to increased price pressure and strengthen the XAU/USD - as a consequence.
On the other hand, the potential of the trading instrument is constrained by rising Treasury yields. Two-year bond yields are once again approaching local highs of 2.50%. It is worth noting that the same increasing inflation risks and expectations of an aggressive Fed policy are also contributing to the rise in yields. The expected tightening of monetary policy in May is definitely a bearish factor for the metals market.
However, the geopolitical situation in eastern Europe is becoming increasingly difficult. Negotiations between Russia and Ukraine are at an impasse. The European Union is preparing new sanctions, including against the Russian energy sector. In the current circumstances, gold could receive significant support as a safe-haven asset.
Tomorrow at 20:00 (GMT+2), the Fed will release the minutes of its latest meeting. On Thursday at 14:30 (GMT+2), meaningful US labour market data will be released. Geopolitics remains the main driver for the trading instrument.
Support and resistance levels
On the 4-hour chart the instrument is correcting in the upper range of Bollinger bands. The key support and resistance levels are 1918.00 and 1943.00. Breakdown of one of these levels will indicate the further dynamics of the pair. The indicator is directed sideways, while the price range remains limited, which indicates the correctional dynamics of the instrument. The MACD histogram is near the zero mark, confirming the correction. Stochastic is correcting in neutral area, no signal to open positions has been formed.
- Support levels: 1831.00, 1864.50, 1888.50, 1917.15, 1929.30.
- Resistance levels: 1942.45, 1964.20, 1989.60, 2020.00, 1998.70.
Trading scenarios
- Long positions can be opened above the level of 1950.00 with a target of 1990.15 and a stop loss at 1915.80. Implementation period: 2-4 days.
- Short positions should be opened below the level of 1915.80 with a target of 1879.00 and a stop loss at 1937.40. Expiration: 2-4 days.