Is Gold Reversing Down Again at the Resistance Zone Above $2,000?

Gold was showing really strong bullish momentum in recent week, which picked up pace last week as the economic data pushed the USD to new lows, while Gold broke above $2,000 and was heading toward $2,050 until Friday. But, we saw a strong bearish reversal on Friday after the US University of Michigan consumer sentiment, showing that the sentiment for the US consumer is improving and inflation expectations increased again, while FED’s Waller made some hawkish comments for further rate hikes.

That sent the USD surging higher and Gold below $2,000, although it closed the week above this major level. Yesterday XAU/USD resumed the bearish momentum, slipping close to $1,980, marking its lowest level in a week which is almost $70 lower than last week’s high. Although it closed the day closer to $2,00 after a rebound in late US trading.

The decline in GOLD was driven by a rally in the US Dollar and higher US yields after a junp in the Empire State Manufacturing Index which turned to positive territory. We saw a sharp rebound in the Empire Manufacturing Index for April, rising to 10.8 from -24.60, surpassing expectations of -18.0. These numbers further support the expectations of another rate hike from the Fed. Expectations for higher FED rates in May pushed yields higher, with the US 10-year yield reaching 3.60%, its highest level since late March. The US Dollar Index has been rising for the second consecutive day and is above 102.20.

On the weekly chart above we see that Gold rebounded off the moving averages in early March. which were acting as support. The price hesitated below the $2,000 level, but eventually pushed above it. Although, buyers couldn’t break the all-time-high, so the resistance zone remains. Last week’s candlestick also closed as a doji, which is a bearish revrsing signal after the bullish move in previous week, so we might see a reversal lower in the coming weeks.

GOLD