During the late hours of Thursday's trading, the price for gold reached above the 1,755.00 level, which is the high level of March.
However, a follow up surge did not occur. Instead, the commodity price declined after sideways trading in the 1,755.00 and 1,759.00 zone. Due to that reason this zone is now marked on the chart as a potential resistance zone.
Notable events for this week are over.
Next week, on Tuesday, the US Consumer Price Index and Core Consumer Price Index could cause moves on all USD assets and pairs.
On Thursday, the US Retail Sales and Core Retail Sales are also bound to influence the value of the US Dollar.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
XAU/USD short-term forecast
On Friday morning, the commodity price was trading above the previous resistance zone at 1,745.65/1,747.60. In addition, the zone was being approached by the 55-hour simple moving average, to which from a technical analysis perspective the creation of the Thursday surge was attributed.
If the 55-hour SMA and the 1,745.65/1,747.60 zone provide support, the yellow metal could surge and test the resistance of the 1,755.00/1,759.00 zone. A passing of this zone could find resistance in the 1,790.00 level, which impacted the price in February.
On the other hand, a passing of the mentioned support levels would first look for support in the 100-hour simple moving average and afterwards the support zone below the 1,725.00 level and the 200-hour simple moving average.
Hourly Chart
On the daily chart, the support zone of the March low levels is not made up only of the recent lows. Research the 2020 March high levels and the 2020 April to June low levels. The zone was providing both resistance and support during last year.
Most recently, on Tuesday, the price passed the resistance line, which kept the metal declining throughout 2021. Namely, the described support zone provided enough support for the metal to break the resistance line.
The surge of the metal should test the 50.00% Fibonacci retracement level of the 2020 low and high levels at 1,763.74. In addition, the Fibo was being approached by the 55-day simple moving average.
Daily Candle Chart
Short term traders took profits
Since Tuesday, the sentiment on the Swiss Foreign Exchange was bullish, as 67% of open position volume was long. By the middle of Friday, the sentiment had declined to 65% long.
Note that the gold sentiment is largely bullish at all times due to long term holders. It is quite rare for it to be below 70%.
Due to that reason, it was assumed that short term traders had closed their long positions and possibly opened short positions.
Meanwhile, in the 1000-pip range around the metal's price the pending orders were 81% to buy the metal.