Gold maintains upward trend despite retreats

Gold experienced significant declines at the end of last week

By Raed Alkhedr | @raedalkhedr | 8 May 2023

Technical Analysis_Golddd-1
  • The strength of the dollar index has a noticeable impact on gold, leading to significant declines

  • In April of last month, US unemployment experienced a decline from 3.6% to 3.4%

  • Gold continues to move within the upward channel, maintaining its trajectory

Strong rise of the dollar and declines for gold supported by positive data

The US dollar has seen a robust increase supported by positive data, leading to a decline in gold prices during the last sessions of the previous week.

Gold commenced the first session of the current week with a marginal rise, trading near the $2022 per ounce mark.

US statistical data reveals that the unemployment rate in the country decreased from 3.6% to 3.4% in April. Moreover, the non-farm employment change index displayed a positive reading, indicating the addition of 253,000 jobs compared to the previous reading of 236,000 jobs.

Jerome Powell, the Chairman of the Federal Reserve, expressed the central bank's commitment to combat inflation and bring it down to the targeted level of 2%. He emphasized the importance of monitoring economic data to determine the course of monetary policy and reassured that the US banking system is robust and adaptable.

Additionally, the Federal Reserve governor acknowledged that achieving the desired inflation rates would take time, highlighting the need for patience in implementing monetary policies to attain all objectives.

Key levels influencing gold's movements

After reaching a significant milestone at $2080, representing the upper limit of its upward channel, gold experienced a retreat to the $2000 levels. However, it rebounded from there and is currently trading around $2022.

Gold may encounter resistance at the $2030 level. If it manages to surpass this resistance, the upward trend may extend to $2055, and further breakthrough could lead to a retest of the previous peak at $2080.

In the event of a decline from the current levels, gold may find support around the $2000 level. If this support is broken, a minor correction may extend the decline slightly to around $1970.

Maintaining support at $2070 is crucial for gold to demonstrate its intention to rise in the short and medium term. However, if this support is breached, it is likely that the decline will extend to the $2035 levels.

Gold 5-8-2023 updated