Gold (XAU/USD) was unable to find any meaningful upside traction on Friday despite the overall tepidness of the US Dollar (USD). There’s some anxiety in the investor community right now. Consequently, the precious metal is winning some downside bids, particularly with the high-stakes US-Russia symposium likely to hold in Alaska. Even with these elements gold is still under pressure, trading close to the floor of our predicted $3,340-$4,150 range.
With the 4-hour chart, gold seems under extreme duress. As for now, it’s having difficulties in attempting to overcome the resistance of the 21-period Simple Moving Average (SMA) at $3,350. This year, skyrocketing Treasury yields have played a huge role in crushing gold’s price action. These yields have served to cap any upside gain. Gold’s price still edges slightly above this important support level at $3,330. This level further serves as the lower limit of its recent consolidation range.
If gold closes firmly under the $3,330 level, analysts are predicting a more serious crash in the future. In relations to bitcoin… They notably flag the psychological $3,300 level as one of the main targets. In today’s market, this expected drop occurs against a backdrop of the 30-year Treasury yield remaining unchanged near 4.903%, continuing to weigh down gold prices. On Thursday by itself, gold plunged by more than 0.50%, pushing it nearer to that short-term support.
The cooler-than-expected US inflation data released this week have continued to spike, pushing Treasury yields and the US Dollar sharply higher. This increase in interest rates has especially affected gold’s performance. We’re taking things up a notch this year. For gold, right now, the ADX is an anemic 18.7. This is a sign that the market environment isn’t generating robust trend momentum.
Even though gold seems to be just floating on Friday, it does get some backing from the softer US Dollar. However, immediate resistance levels remain a challenge. The first major resistance barrier for gold comes in at the $3,350-$3,355 area. In addition, significant resistance is observed around $3,370, where the 50-period SMA at $3,367 intersects with a recent swing high.