Source: PaxForex Premium Analytics Portal, Fundamental Insight
Global economic reports are mixed at best, and Covid-19 restrictions remain in place. Mutations of the virus in Brazil, South Africa, and the UK are more aggressive and result in more hospitalizations. It will pressure the already strained healthcare system and necessitate restrictions at least into the summer of 2021. Governments continue to add debt, and central banks keep interest rates near zero. The combination threatens future economic output and adds to bearish pressures, strengthening the case for safe-haven assets like gold.
January manufacturing PMIs showed weakness globally, German retail sales for December disappointed, and the US labor market is weak. Millions of lost jobs over the past twelve months may never return, adding long-term downside pressure on the global economy. Vaccinations are very slow and may not offer the protection required, especially with ongoing mutations. While 2021 is on track to deliver more robust demand than 2020, it will likely fall well short of previous expectations.
The forecast for the XAU/USD remains bullish after this precious metal stabilized inside of its Ichimoku Kinko Hyo Cloud. Traders may have to endure a sideways trend with the Tenkan-sen and Kijun-sen flatlining. After the CCI accelerated out of negative territory and moved into positive conditions, more upside is expected due to strong bullish momentum. Will bulls regain the upper hand amid positive fundamental and technical developments and force the XAU/USD back into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for XAU/USD remain inside the or breakout above the 1,848.50 to 1,865.00 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,856.50
- Take Profit Zone: 1,952.60 – 1,973.50
- Stop Loss Level: 1,837.60
Should price action for XAU/USD breakdown below 1,848.50 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,837.60
- Take Profit Zone: 1,807.40 – 1,819.60
- Stop Loss Level: 1,848.50
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