On Easter Monday, the gold price has reversed early gains, trading neutrally just below the $2,000 level. Following a long weekend, holiday-thinned trading is likely to extend. While the US Dollar (USD) is clinging to the strong US labor market report released on Good Friday.
On Easter Monday, investors remained cautious as tensions between the US and China over Taiwan resurfaced after “China’s military simulated precision strikes against Taiwan in a second day of drills around the island on Sunday, with the island’s defense ministry reporting multiple air force sorties and that it was monitoring China’s missile forces,” according to Reuters.
The US dollar maintains its post-Nonfarm Payrolls gains, but US Treasury bond yields fall due to US-China tensions.
In response, the de facto US embassy in Taiwan said on Sunday that the US was keeping an eye on China’s drills. Taiwan is closely watched and is ‘comfortable and confident’ that it has sufficient regional resources and capabilities to ensure peace and stability.
The cautious market mood has kept the safe-haven US Dollar afloat, sustaining selling interest in gold. The day ahead may see light trading. As most of the major European markets, as well as the Canadian market, are closed in observance of Easter Monday.
The critical United States Consumer Price Index (CPI) data due on Wednesday will provide a new direction for the US Dollar. As the Federal Reserve’s next policy step will be confirmed. As a result. Gold traders may remain in a wait-and-see mode until the release of US inflation data, keeping the gold price gyrating within familiar ranges.
Gold Technical Outlook
Even though the gold price breached the $2,000 strong support at the start of a critical week on Monday. The daily technical setup remains in favor of bulls.
As a result, the gold price is challenging the pennant resistance-turned-support level of $1,989, below which the April 4 low of $1,977 will be tested.
The confluence of the 21-Daily Moving Average (DMA) and the pennant support near $1,965 will be prodded further south.
The 14-day Relative Strength Index (RSI) is pointing lower while remaining above the midline. Indicating that the gold price has recently declined. However, resurgent demand for the precious metal cannot be ruled out in the coming days.
If gold bulls return to the game, the intraday high will provide immediate resistance of $2,007. Following that, a sustained move above $2,020 will reveal the yearly high at $2,032.
