Gold's uptrend remains intact, but prices face short-term resistance - Analysts

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(Kitco News) - After an impactful week that featured the FOMC rate announcement and April's nonfarm payrolls report, analysts are looking at the dollar and technical indicators to gauge the likely direction of gold prices on Monday.

"The gold market continues to see a lot of pressure to the upside, as the gold markets are being used to protect wealth against devaluation, and of course geopolitical issues around the world," wrote Christopher Lewis, market analyst at FX Empire.

Lewis noted that spot gold initially pulled back below $2,300 per ounce early during Monday's trading session but has since shown signs of life. "The market right now is looking at $2,320 as a little bit of a barrier, but I think given enough time, we [will] probably go higher," he said.

Looking at the daily chart, Lewis said the technical picture shows that gold is still very much in an uptrend. "Above we have the $2,360 level and it's a short-term barrier, but if we can break that, then I think we go looking to the $2,400 level rather quickly, while underneath we have the $2,280 level offering significant support," he noted.

"The 50-day EMA sits just below there as well and that of course comes into the picture for support," Lewis wrote. "[T]herefore I think it remains buy on the dip from a technical analysis standpoint as well." He also noted that fiat currencies are being crushed across the board, including the USD. "Yes, the US dollar is stronger than other currencies but that's just in relation to other currencies," he added. "So, with that being said, the market looks like one you are still looking to buy."

Justin Low, Currency analyst at ForexLive was looking at shorter-term support and resistance on Monday.

"The hourly chart is very much in focus for gold right now," he said.

Low noted that spot gold price caught a solid bid to $2,320 as the dollar declined on Friday, "only to run up against offers at the 200-hour moving average (blue line) before being sent back down to $2,280."

"The weekly low just above that held before price action stabilised but we are still sitting thereabouts over the last one week i.e. in and around $2,300," he wrote.

The price is back up above $2,300 at the time of writing, but spot gold "is still facing resistance from its 200-hour moving average at $2,317 currently," Low said. "Sellers have been showing up close to the key near-term level and that is limiting any further upside for now."

He characterized Monday's trading as "a more pensive start to the week" as the dollar is at an inflection point. "However, gold buyers are standing ready to make the most of it on a break of the key near-term level above," Low wrote. "That will shift the near-term bias to being more bullish with the 26 April high of $2,352 a notable target. But for now at least, the technical hold above must still be respected."

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