Analysis

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GOLD
Apr 1, 2021, 10:18 AM GMT
#Commodities

Gold Strengthens Above the 61.8% Fibonacci Retracement

The price of gold recently rebounded from the 61.8 per cent Fibonacci retracement level at 1690.36 and has been consolidating above it since the middle of March. This is significant news for a number of reasons. Firstly, the 61.8 per cent benchmark represents the final Fibonacci threshold in a sequence (it follows the 23.6 and the 38.2 per cent marks), which means that the price action currently finds itself at one of the most important make-it-or-break-it points on the chart.

Secondly, the retracement level also happens to be positioned very close to the psychologically significant support at 1700.00, which makes it an even more prominent barrier. In other words, the price of gold continues to be trading in a very strong downtrend; however, it has reached a point where bulls can have their last stand. Moreover, the existing bearish trend could very well be terminated around the current level, provided that the bulls take advantage of all of these psychological factors.

There are additional reasons to expect the battle between the bears and the bulls to escalate in the very near future. On the one hand, according to conventional logic, the strengthening dollar should lead to sustained price depreciation of gold because of their inverse correlation. This trend is likely to be bolstered tomorrow because of the expectations for solid Non-Farm Payrolls in the U.S., which should support the dollar even more. On the other hand, rising prices, which are starting to cause some concerns, could lead to heightened demand for safe-havens. This is likely to boost the demand for gold directly.

Profit & Loss
Short Term Long Term Net % Gains
+ - + -
19.30 USD 0 22.44 USD
8.31 USD
2.22%
Short Term
+ -
19.30 USD 0
Long Term
+ -
22.44 USD
8.31 USD
Net % Gains
2.22%

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