Gold Price Outlook: Gold Prices Break Down to Fresh 2019 Lows

Gold price, US Dollar Talking Points:

- Markets are returning from the Good Friday and Easter holidays, and two of the more interesting themes from last week remain in-force. Gold price are pushing down to fresh 2019 lows, continuing last weeks move. Meanwhile, the US Dollar is posturing near monthly highs around the 97.50 level.

- This weeks economic calendar is rather shallow, with the highlights being released tomorrow with the Bank of Canada and Bank of Japan rate decisions. A bigger driver around US markets at the moment is the continued release of quarterly earnings reports, with large names like Amazon, Microsoft, Facebook and Starbucks set to report.

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Gold Price Sets Fresh Low, US Dollar Near Highs

It‘s a slow pace back from the Easter holiday as markets around the world have re-opened for business. This week’s economic calendar is relatively shallow, with the highlights being rate decisions out of Canada tomorrow and the Bank of Japan tomorrow night/Thursday morning. Many of the themes from last week remain at bay, as the US Dollar holds resistance near monthly highs, with buyers yet to provoke a push beyond the 97.50 level. Gold prices, on the other hand, are breaking down to fresh 2019 lows.

Gold Price Four-Hour Chart

Chart prepared by James Stanley

Last week saw Gold prices push down to 1270.70, at which point sellers pulled back before a re-test of the psychological level at 1270. This allowed for price action to drift higher as sellers squared up positions ahead of last weeks close. That drift-higher continued in the early-portion of this week, with Gold prices making a move back towards the 1280.00 level, and this is around the area for potential resistance looked at last week. Another bearish push followed, and at this point, prices are testing below 1270 for the first time this year. The big question at this point is whether this theme has more continuation potential; or whether a reversal might follow as bears shy away from fresh lows.

Gold Price Two-Hour Chart

Chart prepared by James Stanley

US Dollar Holds Resistance Near Monthly Highs- Can Bulls Push Through？

The latter-portion of last week saw a gasp of US Dollar strength after the currency had a generally slugging start to the month of April. This comes amidst a longer-term bullish backdrop in the US Dollar, as an ascending wedge formation populated the market ahead of the Q2 open. This is a type of formation that will often be approached with a bullish bias; but the downside is one of timing as theres little denotation as to when the breakout might actually take place.

US Dollar Daily Price Chart

Chart prepared by James Stanley

The US Dollar last tested resistance in this formation in early-March, just after the ECB rate decision that saw the bank announce a fresh round of TLTROs. But, just a day after that ECB meeting, an abysmal NFP report was released and prices in USD soon tumbled-lower; eventually testing the support side of the formation less than two weeks later around the March FOMC rate decision.

But since then – it‘s been largely a bullish picture, as buyers pushed prices back to 97.50, which is still helping to hold the highs in USD. Last week’s topside push saw prices make a strong move towards this level; but buyers pulled back, begging the question as to whether the US Dollar‘s bullish breakout will soon show, or whether we’ll see another pullback with continued posturing until some type of driver shows up that can compel a bullish breakout to fresh yearly highs.

US Dollar Four-Hour Price Chart