January 29, 2023

Gold Prices – XAU/USD Remains Humble as Dollar Resilience Holds

Gold, US Dollar (USD) Talking Points:

Gold prices rise slightly after the number of reported US Covid-19 cases reaches a global record high of 1 Million

Interest rate expectations and rising US treasury yields and a stronger US Dollar hold Bullion bulls at bay.

Support and resistance levels currently remain at key technical levels for XAU/USD

Omicron Variant Pushes US Cases to a Record High, Risk Sentiment Weighs on Gold Prices

Gold prices have recovered a portion of yesterday’s losses as the rapid spread of the Omicron variant limits losses. With the US reporting a global record high of 1 million cases, rising inflation and potential the restrictions to curb the spread of the latest variant allowed the precious metal to use its safe-haven appeal to limit losses, at least temporarily.

However, despite rising cases, inflationary pressures and expected rate hikes from the Fed (Federal Reserve) have recently supported both US treasury yields and the US Dollar which continue to weigh on the Bullion.

Visit the DailyFX Educational Center to discover how monetary policy affects Forex trading

Gold Price Analysis

Since peaking in August 2020, Gold bears have dominated the systemic, prominent trend which currently remains intact.

Although fundamental factors remain prime catalysts for risk sentiment, key Fibonacci levels of both the 2020 and 2021 move continue to provide support and resistance for both the short and medium-term move.

Gold (XAU/USD) Weekly Chart

Chart prepared by Tammy Da Costa using TradingView

Meanwhile on the daily time-frame, price action remains below the channel formation as bulls struggle to rise above the 50-day moving average (MA), around the critical psychological level of $1,800.

Gold (XAU/USD) Daily Chart

Gold Prices – XAU/USD Remains Humble as Dollar Resilience Holds

Chart prepared by Tammy Da Costa using TradingView

Gold (XAU/USD) Sentiment

Gold Prices – XAU/USD Remains Humble as Dollar Resilience Holds

Gold: At the time of writing, retail trader data shows 81.52% of traders are net-long with the ratio of traders long to short at 4.41 to 1. The number of traders net-long is 20.28% higher than yesterday and 7.49% higher from last week, while the number of traders net-short is 33.23% lower than yesterday and 18.75% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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