Title: Gold trades sideways

May 09, 2022 04:00AM ET

By: AnalysisWatch

The gold price fell by 0.50% to USD 1874.00 per ounce in Asia today, making up for Friday's modest 0.35% rise. There are some constructive aspects to the recent performance of the gold price. The gold price is holding up remarkably well against a rapidly rising U.S. dollar and a U.S. yield curve where much of the yield starts at three. On Friday, as stocks fell and the U.S. dollar rose, it actually rallied slightly. I suspect that some of this support is due to the risk hedge from the weekend, which disappeared again today.

Gold is definitely outperforming Bitcoin right now, which broke through support at $37,400.00 on Friday and is trading significantly lower this morning at $33,740.00. This should give gold fans pause for thought, but it could also coincide with China's return from vacation or indicate that more than a little risk-hedging-based buying is sneaking through the market.

For now, gold is likely to continue to fluctuate around its 100-day moving average, which today stands at USD 1882.50, in a broad but real range of USD 1850.00 to USD 1920.00 per ounce. Risk averse buyers are supporting the downtrend, while the strength of the US dollar is limiting recoveries. Failure at the triangle apex at USD 1835.00 sends gold back into bearish territory. However, gold needs to close above resistance at USD 1920.00 and preferably USD 1960.00 to signal a renewed structural upside. I expect further fluctuating trading ranges in the coming days.