April 3, 2021

XAU/USD statistical and technical analysis

Reading time:4 min

The current price of XAU/USD - Gold Spot US Dollar is 1 729 (April 02, 2021). This commodity is currently traded in an important area. There are other fundamental factors and uncertainties in global financial markets that could affect the price of gold. Let’s look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.77% and -0.77%, respectively. The estimated daily return in both directions based on their probability of occurrence is 0.40% and -0.36%. Friday´s return was -0.08%. Our scoring is currently positive (2) for the month-on-month change and 1 for price indexation. Both scorings range from -3 up to 3. Indexation is currently in a growing phase of the cycle. The estimated cycles development based on our analytical system is shown in the following chart.

Estimated cycles of gold
Source: WALFIR

Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly, the green line the 6 months and the yellow line the annual moving average. The XAU/USD is in bullish sentiment in the case of monthly MA, after rising above it in recent days. As we can see in the chart below, the 6 months and annual MAs still support bearish sentiment.

Daily price development of gold
Source: WALFIR

Recently, there have been more downward trends, with the maximum level reaching 5 consecutive days. More negative days for this commodity last appeared at the end of 2018. Upward trends did not exceed more than 1 day in the same period. In the first days of this year, however, we witnessed 5 positive days. We could use the average annual ATR (Average True Range) obtained from daily data (1.59%) to estimate Stop Loss orders for our positions. The current value is 0.85%. Approximately 90% confidence interval (return between -1.6% and 1.6%) is shown in the histogram below by a red rectangle.

Daily distribution of gold returns
Source: WALFIR

We could use the last decile of low to high returns (2.50%) to estimate Profit Targets, as shown in the chart below.

Daily low to high distribution of gold
Source: WALFIR

The basic technical analysis points to neutral sentiment for the last month after the sideways development of the price. The XAU/USD is currently in the demand zone (green rectangle), where the Fibonacci retracement level of 61.80% is also, along with the psychological level of 1 700. In addition, the spot price has created a double bottom pattern that could motivate bulls. The divergence between price development and the RSI created in the last 4 months could support this scenario. If the price breaks above 1 760, where the Fibonacci retracement level of 50% is also, we could see its increase to the resistance line of 1 850.

technical analysis of gold
Source: TradingView


technical analysis
Walfir Technologies

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic systems. The core of the team (Lubos Snirc and Patrik Mackovych) is involved in the Investro project. Both have experiences in global financial and investment analytics and their articles and analyzes can be found on major financial news portals.


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