Gold Intraday Outlook Apr 20: Early Signs of a Change in Market Sentiment

Last week, we might have seen a change in market sentiment, with U.S. indices up and gold down...

The correlation between gold price and the U.S. equity markets had seemed to be positive recently, but this appears to have changed last week. The tech-heavy Nasdaq ended up 6.1% for the whole week on Friday, Dow Jones gained 2.2% and S&P rose 3.0%. Meanwhile, spot gold fell 0.8% week-on-week.


With a smaller-than-expected decline in China's March industrial production and U.S. jobless claims number retreating, the latest data might suggesting that the coronavirus impacts have peaked. It is worth noticing that the tech-heavy Nasdaq has outperformed the Dow Jones and the S&P 500, which might point out that investors are buying high beta stocks amid improving market sentiment. It is still early to decide whether this would mark a turning point for gold, the intraday outlook for the precious metal does not look decent.


From a technical point of view, spot gold is under pressure as shown on the 1-hour chart. It has formed a double-top pattern, with the neck line broken, and is now trading within a bearish channel. The level at $1,691 may be considered as the nearest intraday resistance, and the first and second support are likely to be located at $1,672 and $1,663 respectively.

Source : TradingView, GAIN Capital


For the longer term, it is worth noting that a bearish shooting star may have formed last week on the weekly chart, while the relative strength index keeps showing a bearish divergence. If it is a turning point for gold, we should see a follow-through bearish candlestick this week.  

Source : TradingView, GAIN Capital


More from Gold

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.