Gold prices remained steady above the $4,700 mark on Friday as the US Dollar nonstop to lose strength. The weaker Greenback helped support the valuable metal even as investors stayed cautious due to fresh tensions between the United States and Iran and doubt surrounding the fragile ceasefire situation in the Middle East. Gold is currently heading for a weekly gain of around 2.25%, mainly supported by hopes that politic efforts could ease regional conflict and reduce demand for the safe-haven US Dollar. However the recent rally appears to be slowing below the $4,770 level.
Tensions in the Middle East continued after Iran indicted the US of attacking an oil vessel in the Strait of Hormuz along with several civilian locations. In response the US reported round and drone attacks targeting its naval forces in the region. Despite these developments US President Donald Trump minimized the clashes and stated that the truce agreement was still in place. He also once again urged Iran to move forward with a diplomatic deal.
Market immersion is now turning toward the upcoming US April Nonfarm Payrolls (NFP) report which is expected later on Friday. Investors will closely watch the employment data for clues about the Federal Reserve future interest rate decisions. Recent disagreements among Fed policymakers have created uncertainty about the central bank next move making the labor market report even more important for traders.
Technical Analysis: Gold Rally Shows Signs of Slowing
From a technical perspective Gold still maintains a positive short term trend although momentum indicators suggest that buying power may be fading. The 4 hour Relative Strength Index (RSI) remains above neutral levels after retreating from overbought territory. At the same time the Moving Average Convergence Divergence (MACD) indicator has started to weaken with the MACD line approaching a bearish crossover below the signal line.
Recent price action shows Gold rebounding from 5 week lows before moving into a merger phase near the $4,700 area over the last few trading sessions. Resistance continues to hold around the $4,765–$4,775 zone which includes April 22 highs and Thursday peak. A successful breakout above this region could open the door toward April high near $4,900.
On the downside immediate support is seen around the $4,650 area which previously acted as resistance. If prices move lower stronger support could appear near the April 29 and May 4 lows slightly above the important psychological level of $4,500.