Gold bulls face a critical resistance area at around 1,815.00

The dollar is down in a risk-on scenario, after enjoying some temporal demand heading into the US opening. Gold trades at around $1,807, not far from a fresh weekly high of 1,810.02. XAU briefly fell below the 1,800 threshold following the release of the first batch of US data.

The XAU/USD pair trades with a positive bias, although its bullish potential seems limited. The daily chart shows that gold trades above congestion of directionless moving averages, while technical indicators hold within positive levels but without directional strength. The bright metal has a strong static resistance level at around 1,815, where it topped in late November and again in mid-December. A break through the level would likely signal a firmer upward strength.

The 4-hour chart offers a similar perspective, as the bright metal is battling with a flat 200 SMA after bouncing testing an also directionless 100 SMA earlier in the week. In the same chart, the Momentum indicator heads nowhere within positive levels, while the RSI indicator turned marginally higher near overbought readings.  Overall, the risk is skewed to the upside as long as the metal holds above 1,803.00, the immediate support level.

Support levels: 1,803.00 1,791.80 1,782.10  

Resistance levels: 1,815.50 1,822.90 1,832.75

Fundamental Overview

The dollar is down in a risk-on scenario, after enjoying some temporal demand heading into the US opening. Gold trades at around $1,807 a troy ounce, not far from a fresh weekly high of 1,810.02. The bright metal briefly fell below the 1,800 threshold following the release of the first batch of US data, which was generally upbeat.

November Durable Goods Orders, which rose 2.5%, beating expectations. Initial Jobless Claims for the week ended December 17 printed at 205K as expected, while the November core PCE Price Index jumped to 4.7% from 4.2% previously and higher than the 4.5% expected.  Later into the session, the country published the December  Michigan Consumer Sentiment Index, which was upwardly revised to 70.6 from 70.4. New Home Sales were up 12.4% in December, after falling by 8.4% in the previous month.

The upbeat mood finally imposed, leading to continued gains in equities, which in turn, weighed on the greenback. The latest catalyst seems to be coronavirus-related. The US Food and Drug Administration authorized a second medication, a Merck drug named Molnupiravir, to treat covid at home after clearing the Pfizer poll on Wednesday. However, Merck’s pill is less effective and carries more risks than the Pfizer one.