Gold Price Restarts Rally Above $1,900, Dollar Dips Further
- Gold price started a strong increase after it broke the $1,900 resistance zone.
- There was a crucial break above a contracting triangle at $1,890 on the 4-hours chart of XAU/USD.
- The US ISM Manufacturing PMI increased from 57.5 to 60.7 in Dec 2020.
- The US ADP Employment could change 88K in Dec 2020, less than the last 307K.
Gold Price Technical Analysis
After forming a support base above $1,850, gold price started a fresh increase against the US Dollar. The price broke many important hurdles near $1,900 to move into a positive zone.
The 4-hours chart of XAU/USD indicates that the price broke a major contracting triangle at $1,890 to start the current increase. It climbed steadily above the $1,900 resistance level, and settled nicely above the 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).
The upward move gained pace above the $1,935 resistance and the price even broke the $1,945 level. If the current trend remains intact, there are chances of more upsides above $1,955 and $1,960.
If there is a downside correction, the previous resistance at $1,935 might provide support. The main support is now forming near the $1,905 and $1,900 levels (the recent breakout zone).
Fundamentally, the US ISM Manufacturing Index for Dec 2020 was released yesterday by the Institute for Supply Management (ISM). The market was looking for a drop in the PMI from 57.5 to 56.6.
The actual result was better than the forecast, as the US ISM Manufacturing Index increased from 57.5 to 60.7 in Dec 2020. Besides, the US ISM Manufacturing Prices Paid increased sharply from 65.4 to 77.6.
Overall, gold price remains in a positive zone and dips could be limited below $1,900. Looking at EUR/USD and GBP/USD, both pairs are holding major supports at 1.2200 and 1.3540 respectively. Conversely, USD/JPY seems to be following a bearish pattern below the 103.50 zone.
Economic Releases to Watch Today
- Germany’s Services PMI for Dec 2020 - Forecast 47.5, versus 47.7 previous.
- Euro Zone Services PMI for Dec 2020 – Forecast 47.3, versus 47.3 previous.
- UK Services PMI for Dec 2020 – Forecast 49.9, versus 49.9 previous.
- German Consumer Price Index for Dec 2020 (YoY) (Prelim) – Forecast -0.3%, versus -0.3% previous.
- German Consumer Price Index for Dec 2020 (MoM) (Prelim) – Forecast +0.6%, versus -0.8% previous.
- US Services PMI for Dec 2020 – Forecast 55.3, versus 55.3 previous.
- US ADP Employment Change for Dec 2020 - Forecast 88K, versus 307K previous.