Gold Technical Analysis – August 20, 2020

Gold (XAUUSD) pulled back sharply yesterday (Wednesday), decreasing the price of precious metal to less than $1950 an ounce. The yellow metal registered a decline of more than $70 an ounce yesterday – an unprecedented nosedive amid progress in COVID-19 vaccine development.

Technical Analysis

As of this writing, Gold is being traded around $1933 an ounce. Given below are the three significant support levels for the yellow metal;

  • First Support  = $1924, the low of Wednesday, August 19, 2020
  • Second Support = $1889, the lower trendline channel on the daily timeframe as demonstrated in the given below chart.
  • Third Support = $1800, the psychological level

A sustained break below the $1889 support level shall pave the way for more losses below the $1800 price zone.

On the upside, the precious metal is expected to face hurdles at resistance levels as described below;

  • First Resistance = $2006, the high of Wednesday, August 19, 2020
  • Second Resistance = $2015, high of the most recent upward move on H4 timeframe
  • Third Resistance = $2075, an all-time high level tested by the yellow metal last week

Short to medium bias for Gold remains bullish as long as the $1800 support zone is intact.

US Initial Jobless Claims News

Labour department of the United States is set to release the initial jobless claims news today (Thursday) at the start of the US trading session. According to the average forecasts of economists, the jobless claims registered 925k reading during the week ending on August 14 as compared to 963k reading in the week before. Generally speaking, a higher jobless claims reading is considered bullish for Gold and vice versa.

Conclusion

Keeping the overall economic outlook in mind, waiting for a buy entry around $1889 appears to be a good day trading strategy.