Gold: correlates to USD strengthening

The US Dollar strengthening and expectation of further decrease of geopolitical tensions which the new US administration might bring, impact the price of gold to get back into its negative correlation with the US Dollar. The Fed Chair Powell noted in a speech that the “Fed is not in a hurry” to cut interest rates, which impact further strengthening of the US Dollar and also increase in the US Treasury yields. The price of gold weakened during the week, from its highest weekly level at $2.685, down to $2.561, where the gold finished Friday's trading session. Analysts are noting that this weekly drop represents the highest fall of the metal within the last three years.

The RSI reached the level of 33, which is quite close to the oversold market side. From this point some short reversal might be expected in the coming period. On the other hand, moving averages of 50 and 200 days are not ready to change the course. Both lines are still moving as two parallel lines with an uptrend, without an indication that this might change in the coming period.

Both macroeconomic and political expectations are now on the market scene. In this sense, a further demand for the US Dollar might impact the price of gold to weaken further in the coming period. Still, for the week ahead, considering that US Dollar is slowly entering into the overbought territory, some short term reversal might be expected, but not too significant one. As per current charts, a resistance line at $2,6K might be tested, eventually $2,65K. A pressure toward the down side is also possible, based on current charts, but with low probability.