Gold Up To 1-Week Highs On Rick Aversion; DXY Back From Maximums

Gold and silver add gains on Monday but both metals remain mostly on range. Risk aversion sentiment is lifting commodities.
Mauricio Carrillo
Gold Up To 1-Week Highs On Rick Aversion; DXY Back From Maximums
Gold Up To 1-Week Highs On Rick Aversion; DXY Back From Maximums

Gold is trading positive on the first day of the week as risk aversion is taking the market following political tensions in Libya and weaker US treasury and US dollar.

Market sentiment is weak on Monday as investors are digesting comments from US Secretary of State Pompeo calling the Lybian Army to stop offensive on Tripoli, Lybia’s capital.

Brexit concerns, uncertainty over China-US trade relations, and a wait and see mode ahead of Fed minutes of the last FOMC decision on Wednesday are fueling the risk aversion sentiment.

“The current rally in gold, whether it be short-covering or fresh speculative buying, may last until Wednesday’s release of the minutes from the Fed’s last monetary policy meeting,” FX Empire analyst James Hyerczyk said in a recent article.

“Gains may even be extended beyond that if the minutes reveal a more dovish central bank.”

US employment not that bright

On the other hand, Margaret Yang, CMC Markets analyst highlighted that “the dollar index is pulling back from multi-week highs,” as last Friday’s employment data brought pros and cons to the current US economy.

“Though the non-farm payrolls data was better than expected, the manufacturing jobs fell which is a bad signal for the sector and doesn’t show a bright picture for the economic outlook,” Yang said to CNBC.

Dollar index down from highs

The US Dollar index is trading negative on Monday as investors seem to be profit taking ahead the US earnings season and also risk aversion following political and economic tensions around the world.

DXY is currently trading 0.19% negative on the day at 97.18. The unit is retreating from Friday0s highs at 97.50, lifting gold to break the metal’s range traded last week.

Gold breaks the range above 1,295

XAUUSD daily chart Gold April 8

Gold is trading positive on Monday as a weak dollar is lifting the metal to fresh highs in a week.

After trading sideways last week between 1,285 and 1,295, the pair is currently breaking above that range to trade as high as 1,300, its highest level since March 29.

Currently, XAU/USD is trading 0.47% positive on the day at 1,297. Short- term trend is shifting, and technical indicators suggest more upside in the next few days.

FX Empire’s Hyerczyk believes that the current rally in Gold may last until Wednesday with the minutes from Fed’s last monetary policy meeting. “Gains may even be extended beyond that if the minutes reveal a more dovish central bank.”

In this framework, next resistance are at the 20-day moving average at 1,301, then 1,307, where the 50-day MA lies right now. Above there, 1,325 and 1,300 are the frontiers. Thought it would be complicated for the gold to get there this week.

Silver remains on the range, positive but…

XAGUSD daily chart Silver April 8

Silver is trading positive on the first day of the week amid risk aversion and its positive correlation with the XAU/USD.

XAG/USD is trading 0.43% positive on the day at 15.17; however, the unit remains in the range traded in the last week between 15.05 and 15.20.

Technical indicators look weak with studies recovering ground but still depressed. A break above the 15.20 area would give bulls the control and the 15.30 will be the next natural resistance.

Above there, 15.60 is the frontier to start thinking in a bullish trend.

To the downside, 15.05 and 15.00 are the support. Below there, 14.80 is a strong buying zone that would open the door for a congested area between 14.50 and the mentioned 14.80.

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