Although the US dollar continues to strengthen this week, the bull market for gold has not yet peaked, according to StoneX Bullion Market Analyst Fawad Razaqzada. The analyst expects gold to continue to soar despite the short-term strength of the USD.
News about the collapse of the yellow metal is an exaggeration!
cryptokoin.comAs you follow from , gold continues to remain strong. In an article published Monday for City Index, Razaqzada acknowledged that gold’s recent uptrend stalled late last week against the strength of the US dollar. But he says reports of the yellow metal’s collapse are exaggerations. In this context, the analyst makes the following statement:
The precious metal exhibited slightly bearish price action as it retreated from its previous record high. This has led to some calls that it may have peaked. While there are some doubts about its short-term technical prospects, I firmly believe that its long-term trajectory remains bullish and prices could soon reach unprecedented highs again.
This is necessary for the gold price to set new highs!
However, Razaqzada says that the dollar must continue its downward trend for gold to set new highs. The analyst says that although the Federal Reserve maintains its dovish stance, the dollar has gained strength with the support of external factors such as the unexpected interest rate cut by the Swiss National Bank and the dovish stances of the Bank of England and the Reserve Bank of Australia. Based on this, the analyst makes the following comment:
Declines in sterling, the Australian dollar and the euro have further fueled the dollar’s rise, along with recent PMIs and encouraging US economic indicators such as existing home sales and unemployment claims. However, it seems unlikely that these indicators will deter the Fed from cutting interest rates in June. Especially if inflation remains low.
The main risk event for the dollar and gold prices
Razaqzada highlights the main risk event for both dollar and gold prices this week. This event is the Core PCE Price Index coming on Friday. The market will then turn its attention to the March Nonfarm Payrolls and CPI reports early next month. The analyst says the following in this regard:
US data for March, scheduled to be announced at the beginning of April, will have a significant impact on the course of the dollar. Weakness in these figures, especially weakness in upcoming inflation data, could precipitate a sustained decline in the dollar and potentially lend support to gold.
What’s in the technical picture of gold?
The analyst also looks at the technical chart of gold. According to Razaqzada, all indicators point to gold continuing its recent upward trend in the medium and long term. However, profit taking and the strength of the dollar have been reducing the momentum of gold in recent days. The analyst points out the following level:
The long-term trend is clearly bullish, creating higher lows and higher highs before reaching new record highs last week. A deviation from this sequence would indicate a transition to a bearish outlook. The most recent high of $1,984 seen in February, if surpassed, would indicate a potential outcome of gold’s long-term uptrend.
Razaqzada says as long as support at $1,984 remains intact, gold’s recent short-term weakness should not significantly impact the long-term technical outlook, with many buyers waiting in the wings to jump on dips. Another important level that the analyst watches is $2,146. Razaqzada also looks at these technical levels:
Old resistance levels could become support if they are retested, especially the $2,075 to $2,081 range, which has served as significant resistance over the past few years. Now, this is a very important area of support to watch. A break below this level ($2,146) could trigger a larger correction towards the $2,075 to $2,081 support range, which could potentially present good buying opportunities. Key resistance levels include $2,195, where gold struggled to hold on during its recent record break, and the next target at $2,222.
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