XAU/USD: BTC creates serious competition for gold 01 April 2021, 11:53

XAU/USD: BTC creates serious competition for gold

01 April 2021, 11:53

Scenario
Timeframe	Weekly
Recommendation	BUY STOP
Entry Point	1746.0
Take Profit	1870.0
Stop Loss	1700.0
Key Levels	1600.0, 1682.0, 1746.0, 1870.0

Alternative scenario
Recommendation	SELL STOP
Entry Point	1682.0
Take Profit	1600.0
Stop Loss	1720.0
Key Levels	1600.0, 1682.0, 1746.0, 1870.0

Current trend

Gold quotes correct upward, trading at $1,714 per ounce.

The instrument has recently been under strong pressure from several factors at once. Since the precious metal is a shelter asset used by investors to preserve capital in the long term, it is increasingly challenged by fast-growing speculative assets such as cryptocurrencies. For a long time, BTC quotes have been trading close to absolute maximums, attracting more and more attention of market players with high profitability, which makes them make a choice not in favor of gold.

The growing bond market also creates pressure. Not only are they more reliable assets in terms of savings but also the yield on 10-year securities is approaching 2%, which creates a serious competitive advantage in terms of savings and inflation compensation. Since the beginning of the year, gold quotes have lost about 14%, and the yield on US Treasuries during this time increased from 0.910% to 1.750%.

Support and resistance

Quotes are moving within the global corrective trend, starting to work out a rare Saucer pattern. The probability of this pattern triggering is close to absolute, and soon the local growth will continue. Technical indicators are in the state of a sell signal. The fluctuation range of the EMA indicator "alligator" began to narrow, and the histogram of the AO oscillator is trading in the negative zone.

Support levels: 1682.0, 1600.0.

Resistance levels: 1746.0, 1870.0.

Trading tips

After the pattern implementation the asset's corrective growth or consolidation above the local resistance level of 1746.0, buy positions with the target at 1870.0 are relevant. Stop loss is 1700.0. Implementation period: 7 days or more.

After global decline or consolidation below the local minimum of 1682.0, sell positions with the target at 1600.0 are relevant. Stop loss is 1720.0.