General analysis XAUUSD for 05.01.2022
Current Dynamics
Gold strengthened moderately yesterday and today, recouping most of Monday's losses. On Tuesday the XAU/USD was supported by the publication of weak US statistics. The number of open jobs in the U.S. labor market declined to 10.56 million in December, but a correct assessment of the index requires waiting for Friday's report on the U.S. unemployment rate. Additional pressure on the dollar was created by the slowdown of business activity in the manufacturing sector. Decrease of the index is not critical, as the index is steadily keeping in the positive zone. At the same time the dollar is sensitive to employment, inflation and business activity reports at the moment, as the Fed has started to pursue aggressive and risky monetary policy. Weak statistics will force the regulator to cancel three rounds of monetary tightening this year. If the U.S. central bank fails to raise its key rate at the March meeting, gold will trade within an uptrend in the first half of 2022.
It is also worth noting that the emergence of a new strain of the coronovirus could slow the pace of economic activity and make adjustments to the Fed's plans. So far epidemiologists haven't estimated danger of a new virus, however investors increased volume of long positions on gold, believing that XAU can return the status of "an asset of refuge" in the first quarter of 2022. Confirmation is the growth of the trading instrument, despite a significant increase in the number of people employed outside the U.S. agricultural sector.
Today at 9:00 p.m. (GMT+2), the minutes of the Fed's latest meeting will be released. Tomorrow at 15:30 (GMT+2), unemployment claims and the trade balance will be released.
Support and resistance levels
On the 4-hour chart, the instrument is strengthening at the top of the Bollinger Bands. The indicator reverses to the top and the price range widens, indicating a continuation of the uptrend. MACD histogram is growing in the positive zone, forming a buy signal. Stochastic is preparing to leave the overbought area, a strong sell signal may be formed within 1-2 days.
- Support levels: 1797.20, 1802.30, 1807.30, 1814.50.
- Resistance levels: 1822.00, 1826.05, 1832.85.
Trading scenarios
- It is possible to open long positions above the level of 1828.30 with a target of 1841.00 and a stop-loss at the level of 1820.80. Implementation period: 1-2 days.
- Short positions should be opened below the level of 1819.75 with a target of 1801.70 and a stop-loss at the level of 1824.20. Implementation period: 1-2 days.