Gold finished Friday’s session on a lower note, but the week reclaimed some of its brightness, gaining 1.79% as market sentiment fluctuated as the North American session ended. At the time of writing, XAU/USD was trading at $1958.36 a troy ounce, down some 0.19%. Global equities overnight reflected a mixed market mood, courtesy of Russia’s invasion of Ukraine, high inflation looming, and central bank tightening. Meanwhile, once the NATO summit is in the rearview mirror, the US and the Eurozone agreed on natural gas supply deal to cut dependence on Russia. 

Gold (XAU/USD) bias is still up, but it would remain under selling pressure. Failure to reclaim February 24 daily high at $1974 left the precious metal exposed to selling pressure unless XAU bulls recover the aforementioned. It is worth noting that the 200-day moving average (DMA) at $1816.85, from an upslope, is horizontal, indicating that the steep rally above $2000 might be subject to a further correction lower.

Upwards, XAU/USD’s first resistance would be $1974. Once cleared, the next resistance would be $2000, and the YTD high at $2075.82.

On the flip side, and the most likely scenario, XAU/USD’s first support would be March 20 low at $1950.30. Breach of the latter would expose March 16 daily low at $1895.06, followed by November 16, 2021, low at $1877.14.

Another perspective of The 20-day SMA and the Fibonacci 38.2% retracement of the latest uptrend seem to have formed a key technical level at $1,950. In case gold starts using that level as support, it faces an interim resistance at $1,965 (static level) before it can target $1,990 (Fibonacci 23.6% retracement) and $2,000 (psychological level).

For short term bearish opportunities, the XAU/USD could face renewed bearish pressure if it fails to hold above $1,950 and decline toward $1,920 (static level, lower limit of the consolidation channel). With a daily close below that level, the pair could test $1,900 (Fibonacci 61.8% retracement, 50-day SMA).

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Mar 27 2022