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The gold rate reached a new all-time peak last week despite the dollar’s strengthening. A Fed rate cut isn’t ruled out, but the central bank’s further decisions will be subject to macro statistics.
The US Department of Labor report for March and PMI indices will be published this week. These events may affect the dynamics of the XAUUSD exchange rate. However, technical and fundamental analysis indicates that the uptrend will likely continue.
The article covers the following subjects:
Key takeaways
- Last week, US government bond yields continued to fall, and a shift to a looser monetary policy wasn’t excluded at the Fed meeting. However, the dollar rate evolution remains positive.
- The XAUUSD continues trending upward: demand for safe haven assets remains high.
- We are waiting for the publication of the US PMI data and the report of the US Department of Labor for March: they will impact the further evolution of gold quotes.
Key fundamentals & events impact on Gold price
According to expert forecasts, the price of gold has risen too high, but we cannot expect a more or less significant correction in the current situation. Moreover, the rate may grow further, reaching new resistance levels.
Statements by the Fed and other central banks worldwide are controversial, but the majority favor a looser monetary policy. At the same time, geopolitical tensions and the upcoming US elections are driving investors to boost their positions in safe-haven assets, including gold.
It’s worth noting that US government bond yields continue to fall, which often occurs amid expectations of monetary policy easing. As a rule, the demand for safe-haven assets, including gold, grows in such conditions.
The precious metal does not produce investment income, but monetary policy easing helps reduce purchasing and storing costs and, consequently, increases demand for gold.
Investors are factoring in three Fed rate cuts in 2024 and one or two more cuts next year. This creates preconditions for the XAUUSD price’s further growth.
XAUUSD Technical Analysis
New highs were reached in the week ended 31.03.2024: the XAUUSD rose to 2235.00. Altogether, the gold price climbed by more than $190 a troy ounce over the past month.
Gold quotes are far from starting to decline, although the asset is overbought, and analysts signal a potential correction amid the USD’s projected consolidation.
The RSI, OsMA, and Stochastic technical indicators are also in the buyer’s area on daily, weekly, and monthly charts.
At the same time, the XAUUSD price is in the bullish area:
- above key support at 2,010.00 (ЕМА200 on the daily time frame) and 2,002.00 (ЕМА50 on the weekly time frame), medium-term bullish market;
- above key support at 1835.00 (ЕМА-200 in the weekly chart) and 1,820.00 (ЕМА-50 in the monthly chart), long-term bullish market;
- above key support at 1,530.00 (ЕМА-144 in the monthly chart) and 1,400.00 (ЕМА-200 in the monthly chart), global bullish market.
The current situation suggests seeking optimum entry points to go long. Short-term and medium-term shorts are also possible, particularly when confirmed by clear signals, but longs look preferable.
The price is expected to continue growing in the main scenario. Breaking out last week’s high at 2235.00 could be the clearest signal. However, waiting for a pullback to support levels near 2,195.00, 2,185.00, and 2,179.00 (ЕМА200 on the H1 time frame) would be safer. Pending buy limit orders can be placed at local support of 2,164.00 and 2,146.00 with a stop order below 2140.00.
An alternative scenario will play out if the price breaks out the recent high of 2,222.00 and corrects to support at 2,195.00, 2,185.00, and 2,179.00. A breakout of support at 2,179.00 will be a potential signal for opening short trades with targets at local support of 2,164.00 and 2,146.00.
Only a breakout of the support levels of 2,103.00 (EMA50 in the daily chart) and 2,090.00 can seriously alert buyers. Consolidation below 2,010.00 and 2,002.00 may even drive the XAUUSD into the medium-term bearish zone. In that case, medium-term short trades should be given preference.
- Support levels: 2,222.00, 2,200.00, 2,195.00, 2,185.00, 2,179.00, 2,164.00, 2,146.00, 2,125.00, 2,103.00, 2,100.00, 2,090.00, 2,033.00, 2,010.00, 2,002.00, 2,000.00, 1,900.00, 1,890.00, 1,835.00, 1,820.00
- Resistance levels: 2,235.00, 2,240.00, 2,250.00, 2,270.00, 2,285.00, 2,300.00
Weekly trading plan for gold
Demand for gold persists. The recent update of all-time high at 2,222.00 indicates strong continued bullish momentum.
How to trade XAUUSD: Trading Scenarios this week
Technical indicators are in the buyer’s area; fundamental factors indicate that long trades should be given preference. At the same time, we cannot rule out a correction.
Main scenario
- 1. the price will hit new peaks;
- 2. the quotes will steady in the range of 2,185.00 – 2,222.00 and 2,195.00 – 2,235.00 and start rallying amid new growth factors.
Aggressively:
- Buy by Market; Stop Loss 2,210.00.
Moderately:
- Buy Stop 2,238.00. Stop Loss 2,190.00,
- Buy Limit 2,220.00. Stop Loss 2,190.00
- Buy Limit 2,195.00. Stop Loss 2,175.00,
- Buy Limit 2,185.00. Stop Loss 2,170.00.
Targets: 2,237.00, 2,240.00, 2,250.00, 2,300.00, 2,400.00, 2,500.00.
Alternative scenario
In an alternative scenario, the price will return below the level of 2,220.00 and decline to local supports at 2,195.00, 2,185.00, and 2,180.00. Then the bulls will go long again, and the price will rally. At the same time, the dollar could strengthen more significantly, and the XAUUSD’s downward correction may continue to 2146.00 and 2164.00. A breakout of those levels, in turn, could trigger a deeper correction, which, however, will most likely be limited by strong support levels at 2125.00 and 2103.00.
Aggressively:
- Sell Stop 2,219.00. Stop Loss 2,238.00.
Moderately:
- Sell Stop 2,190.00. Stop Loss 2,208.00;
- Sell Stop 2,180.00. Stop Loss 2,205.00;
- Sell Stop 2,175.00. Stop Loss 2,205.00;
Targets: 2,164.00, 2,146.00, 2,125.00, 2,110.00, 2,103.00, 2,090.00
How to trade XAUUSD spot gold based on today’s NFP data
US labor market data, inflation, and GDP are critical indicators the Fed considers when making monetary policy decisions. The NFP (Non-Farm Payrolls) indicator draws particular attention as it reflects the dynamics of new jobs outside the US agricultural sector. It affects the dollar rate, the American stock market trends, and, indirectly, the commodity markets, particularly the price of gold.
Positive NFP data strengthen the dollar, and the price of gold may decline. So, we may open short positions in it. If weaker data on the labor market and NFP are released, we can consider long positions in gold. It is worth noting that trading NFP data can be risky but highly remunerative at the same time. More cautious investors often choose to stay out of the market during the NFP publication period.
It is also important to consider other fundamental factors when trading gold: general market trends, macroeconomic statistics, investor appetite for risk, the Fed’s and other central banks’ monetary policies, etc.
The March report from the US Department of Labor indicated an increase in employment outside the agricultural sector by +275 thousand. Despite these strong NFP data, the dollar got under pressure. Investors could have grown wary of the unemployment rise to 3.9% (compared to 3.7% in January) and the revision of previous NFP data for January from +353 thousand to +229 thousand.
Subsequent events and the publication of important US macro statistics pushed the dollar to resume growth. However, the price of gold also continued to rise.
The next publication of the US Department of Labor report for March is scheduled for 5 April. Preliminarily, the NFP will be at +200 thousand new jobs; unemployment is expected to stabilize at 3.9%, and wages are expected to continue growing. Such positive data indicate the stability of the US labor market. If they are confirmed or come in above expectations, the dollar can be expected to grow stronger, even more so amid Fed Chairman Jerome Powell’s recent statement that “there is no need to rush to cut rates.”
However, the XAUUSD should not be expected to fall drastically. When the dollar strengthens, it is better to wait until it finishes growing. You can then open long positions in the XAUUSD at the best prices.
XAUUSD buy/sell target zones.
| Buy, $ | Sell, $ | ||
|---|---|---|---|
| L1 | 2235.00 | S1 | 2220.00 |
| L2 | 2240.00 | S2 | 2200.00 |
| L3 | 2250.00 | S3 | 2185.00 |
| L4 | 2270.00 | S4 | 2170.00 |
| L5 | 2285.00 | S5 | 2165.00 |
| L6 | 2300.00 | S6 | 2150.00 |
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H2 – XAUUSD Forecast for this week
The trading week ending 07.04.2024 will start slowly as many banks and precious metals markets are closed on Easter Monday. Then, active trading will resume on Friday, when the US Department of Labor has published data for March. Market volatility and the XAUUSD’s volatility will increase during the week.
The dollar may continue strengthening if the US macro stats turn out positive. Otherwise, expect the XAUUSD to grow further.
The main forecast remains the same: the gold price is expected to rally further. Still, we can’t rule out shorts either, especially if a long-awaited correction occurs. The question is how deep and long it will be.
The XAUUSD’s general trend remains bullish. The basic scenario suggests either growth and updating local highs above 2,235.00 or fluctuation between 2185.00 and 2222.00 or between 2195.00 and 2235.00 while waiting for new growth drivers.
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Price chart of XAUUSD in real time mode
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