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Gold has moved back towards the $1,900 level as the US dollar index breaks to a multi-year high and risk-off themes stemming from the Chinese lockdowns and negative geopolitical implications.
The yellow metal usually has a negative price correlation with the US dollar index, and this is exactly what we are seeing now as gold falters while the US dollar roars towards the 103.00 level.
To make things worse, Russian’s Foreign Minister said yesterday that NATO is on the brink of war with Russia. This caused a sea of red of global stocks and commodity prices.
Meanwhile, data showed US Consumer Confidence edged lower in April to add yet more pressure to the bearish economic sentiment, which is getting worse from the Beijing and Shanghai lockdowns.
Other precious metals were hit hard, with both silver and copper hurting badly due to the obvious economic implications that subdued demand for economic goods cause these metals.
Current sentiment metric towards gold show that traders are bullish, but not overly bullish towards the price of gold The ActivTrader market sentiment tool shows that 65 percent of traders are bullish towards gold.
With this strong way sentiment bias it is not bullish for gold prices as retail are usually wrong. However, it should be noted that sentiment has dropped by nearly 25 percent since last week.
Gold short-term Technical Analysis
The short-term technicals for the yellow metal shows that a technical pullback appears to be underway, following a big technical rejection from the $2,000 price level.
Looking at the well-denoted pattern on the four-hour price chart, a coming price correction towards the towards the bottom of a falling trendline seems likely intraday, towards the $1,880 support area.
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Gold Medium-term Technical Analysis
The daily chart shows that gold remains a strong buy while trading above the $1,800 level, which is the location of the 200-day moving average of the yellow metal.
I would expect that the price of gold could hit $17,400 if its losses the 200-day moving average. If not, we should probably expect a retest of the $1,800 resistance level.
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