Gold Analysis – This Moving Average has Something to Say

The hardest to react to such an increase of the US Dollar index was Bitcoin losing 20% yesterday. Gold was stable yesterday and didn’t show signs of a bearish reversal amid a sudden surge of Covid-19 cases in China.

The US Dollar Dollar index set so far the lowest point on January 06 this year at 89.391 and was able to recover and breakout from the descending downtrend channel of November 02, 2020.

If the US Dollar closes above 90.720 it might show one of the sharpest jumps up to 92.100 after testing a resistance at 91.120.

The gold chart below shows that the precious metal is back in the descending channel. As seen on the chart the further uptrend of XAU/USD was denied by the MA200. This Moving Average on the chart signalled the bearish continuation, examples are September 10, 15-16, October 09, November 16 and December 08 of 2020. Hence, Gold needs to close above this MA200 to continue the uptrend.

By the time of writing this article, XAU/USD quote on Overbit is $1845 per ounce and remains above the dynamic support and the neckline of the previously confirmed Head and Shoulders pattern, see the pink line on the chart below.

While Gold remains above this dynamic support, it still holds all the chances to continue bullish. The first resistance Gold will face when closing above the MA200 is $1880. The bullish run of XAU/USD is also supported by RSI and MACD indicators, however MACD hasn’t crossed the signal line yet, although is very close to doing so.

If Gold closes below the dynamic support it will drop towards $1817 and below that to $1780. The US JOLTS Job openings as per November announced just now 6.527M, higher than the forecasted 6.632M and the previous month’s 6.494M, this data signals the recovery and could trigger investors to bet on the US Dollar rather Gold.

Another important data from the US which Gold investors should trace is tomorrow’s CPI and Core CPI. Forecasts are mixed, while the MoM CPI as per December is expected to surge and be at 0.4%, Core CPI (MoM) as per December is expected to fall and be at 0.1%. While the JOLTS Job Openings look positive and announced numbers are higher than expected, the CPI data could be more positive as well.