The XAUUSD daily chart is not trending despite the emergence of the omicron covid variant. The news shook risk markets on Friday, but gold's price action was not able to capitalise. As the risk-off sentiment took hold, bulls pushed gold's price up. However, at the apex, they lost control to the bears, and the price closed well off of Friday's high (aqua arrow). Moreover, we have added a triple moving average system for trend analysis. Moving averages are trend-following indicators and work very well when there is an underlying trend. Below we see that the fast green average has moved below the slow red average (aqua ellipse). If the orange mid-average follows suit and crosses below the slow red average, the EMAs will have formed up bearishly. If this happens and the EMAs develop an angle and a separation, downwards momentum will be generating. In this regard, we note that the stochastic is already below 20 (blue rectangle area). If it maintains this position, gold is likely to remain under pressure and the EMAs to develop bearishly.
Past Performance: Past Performance is not an indicator of future results.
We draw attention to Fed Chair Powell's scheduled testimony on Capitol Hill for this week. Tomorrow at 3:00 pm GMT, he is due to testify on the CARES Act in front of the Senate Banking Committee. On Wednesday, he will appear at 3:00 pm GMT before the House Financial Services Committee. These testimonies tend to cause market volatility. As such, gold is likely to be affected and potentially take direction. Any hint of dovishness may drive capital from the greenback into the precious metal and vice versa. We are also watching the initial jobless claims and NFP release with interest. The employment market has been improving with the latest jobs data, and these numbers are likely to impact monetary policy expectations.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.