- The bias is bullish. Temporary retreats could bring us new long opportunities.
- The R1 is seen as the first upside obstacle.
- The US inflation data could shake the price of Thursday.
The gold price rallied on Friday and now is trading at $1,878 below today’s high. USD’s depreciation helped the yellow metal to approach new highs.
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Still, the XAU/USD could retreat a little after its strong rally before extending the rise. The bias is bullish, so temporary retreats could help the buyers to jump in again.
Fundamentally, the price of gold registered sharp movements after the US and Canadian data on Friday. The US NFP came in at 223K in December versus the 200K expected but far below 256K in November. The unemployment rate dropped unexpectedly to 3.5% from 3.6%, even though the economists had expected a potential growth of 3.7%, while Average Hourly Earnings disappointed after registering only a 0.3% growth compared to the 0.4% growth estimated.
Gold edged higher after the ISM Services PMI came in at 49.6 points versus the 55.0 forecasted. The economic indicator reported contraction, that’s why the price of gold exploded.
In addition, Factory Orders also came in worse than expected, while the Canadian Unemployment Rate and Employment Change reported positive data.
On Thursday, the US is to release its inflation data. The CPI and Core CPI represent the week’s most important events and could bring sharp movements in gold.
Gold price technical analysis: Strongly bullish
Gold ended its temporary retreat and extended its growth. The price dropped slightly in the short term and tried to retest the $1,824 former resistance (resistance turned into support).
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Now, it has registered a valid breakout through the $1,856 former high and above the channel’s upside line confirming strong buyers and an upside continuation.
So, the outlook remains bullish as long as it stays above these broken obstacles. Consolidating or developing only a small retreat could bring us new long opportunities.
The price could come back only to test and retest the near-term support levels before jumping higher. Technically, the weekly R1 (1,882) represents the first upside obstacle.
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