Technical Analysis

GOLD Price Analysis – April 4, 2023

By LonghornFX Technical Analysis
Apr 4, 20233 min

Daily Price Outlook

Gold (XAU/USD) is currently trading at 1,980.01, down 0.23% in the last 24 hours. As the US Dollar gains strength amidst mixed market sentiments, the price of gold is declining.

OPEC’s Surprise Decision

The Organization of the Petroleum Exporting Countries (OPEC) and its associates, also known as OPEC+, have announced output target cutbacks on Sunday, causing confusion in the inflation forecast and sending oil prices higher. OPEC+ has reduced its output target by 1.1 million barrels per day, resulting in an approximately 6% overnight increase in Brent crude prices.

Moreover, Russia has stated that it will continue to aim for a reduction of 500,000 barrels per day through the end of the year, further fueling inflation concerns and projections of a hawkish shift in the Federal Reserve's outlook for rate hikes.

As a result, XAU/USD declined due to the rising demand for the US dollar as a safe haven, following the approval of a surprise output reduction by OPEC+. The US Dollar Index (DXY) is currently up 0.16%, trading at 102.26.

Odds of Fed Rate Hikes

Data released on Monday from the US suggests that the Federal Reserve is nearing the end of its rate-hike cycle. The ISM manufacturing index for March fell to 46.3, the lowest level since May 2020.

Prior to the release of the US ISM report, markets were anticipating a 25 basis point Fed rate hike in May, with a probability of almost 60%. However, after the disappointing data, the likelihood of a 25 basis point Fed rate hike next month dropped to 54%. Consequently, the rates on US Treasury bonds fell, with the benchmark 10-year yield returning to 3.421%.

Despite revived inflation concerns being ignored by the markets, there has been some improvement in risk sentiment due to the resurgence of dovish Fed forecasts. However, the US Dollar is rebounding, limiting the XAU/USD.

Gold traders are now awaiting the release of mid-tier US economic data later in the day, such as JOLTS Job Openings and Factory Orders, for new trading momentum.

Ultimately, the value of the US Dollar will have an impact on the XAU/USD. Therefore, the attitude of Wall Street is also important. Moreover, statements from Federal Reserve officials will be significant ahead of Friday's crucial Nonfarm Payrolls report from the United States.


Gold Price Chart - Source: Tradingview

Gold (XAU/USD) Intraday Technical Levels

Support      Resistance

1959            2000

1934            2016

1918            2040

Pivot Point: 1975

Gold (XAU/USD) – Technical Outlook

The gold price concluded positively yesterday, settling above the $1,962.50 level. It halted the bearish correction and is now poised to resume the primary bullish trend, supported by the EMA50. The next major targets are anticipated to be the $2,000.00 and $2,040.00 levels.

The price is again moving within the symmetrical triangle, and a breach of the $1,985.00 level is necessary to provide the positive momentum required to rally toward the aforementioned targets. It should be noted that the current negativity of the stochastic indicator may impede the attempts to continue rising and could lead to some sideways fluctuations.

Generally, a bullish bias is expected for the near future, contingent upon the price maintaining stability above $1,962.50. A break below this level would pressure the price to revert to the corrective bearish trend, with initial targets set at visiting the $1,933.20 area.


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