Gold Technical Forecast: The Precious Metal near February high

The precious metal has been bearish since the beginning of the year 2021. Despite the surge in cryptocurrencies, gold suffered a great loss to the start of the year 2021 and it looks like things are about to change from now on.

The first quarter of the year has seen gold plunge from 1952 price area to 1684 price level, which amounts to over 2,500 points loss. But things have changed pretty quickly at the beginning of the second quarter as the strength of the US dollar tends to weaken.

The price of Gold bounced back from the weekly support level at 1680 and for the first time in 3 months and maintained its price level above the support level in April.The Non-Farm Employment Change data was released last Friday for April; 266K jobs were added but it was far less than the forecast and the previous data of 770K jobs that were released for March. The Unemployment Rate was also released on Friday, with the actual figure being 6.1%, a little bit higher than the forecast. These are bad data for the US dollar as the strength of the currency declines further.

According to the Commitments of Traders (COT) Report that was published on Friday, non-commercials, in other words, the banks are closing more short positions on gold than long positions. A total of 645 short positions were closed on gold and 523 long positions were closed on gold as well.

Gold is currently trading above the high of April and it's almost at February high. More net long positions from the banks and more weak economic data from the US will see gold move past February high and towards January high of 1952 price level.

Price is presently above the 200 EMA on the daily timeframe and it looks pretty well that the bullish run is about to get started on the precious metal.

NOTE:

Investors diversified their portfolio at the beginning of the year by buying more crypto as the cryptocurrency market surge at the beginning of the year. Fewer investments were made in gold as the crypto market was booming, making the price of gold decline further as more eyes were on crypto. Most cryptos are now at all-time highs and thats the best time to liquidate some position and invest it back into the gold market.