Gold Price Analysis: More upside for the precious metal as it consolidates its position above USD 1600

Macro backdrop

Today there has been some volatility in risk assets such as the indices after the US weekly initial jobless claims data reached another record level (6,648K). This led to a sharp fall in the indices as the S&P 500 dropped around 2.47% in a 50 min period following the news. Since then the indices have recovered and pushed into positive territory but gold still managed to hold on to its gains. 

Tomorrow the market will get the latest non-farm payrolls data for March and -100K is expected vs the previous reading of 273K. The market can expect some volatility again when the release is due and how much more can the worlds central banks do in terms of stimulus? It is a view held by many analysts that money is becoming more and more worthless due to the QE to infinity policies being enacted by the major central banks. In this scenario, gold will strengthen as it is a tangible asset and there is only a finite amount of supply.

Technical picture

Gold has been bullish for the session and yesterday as the market bounced off the USD 1575.00 support zone. Now there is another resistance zone in the way in the form of the black trendline at around USD 1620.00. Beyond that, the USD 1640.00 level looks pretty strong but if the economic news gets worse they might just be a test of higher levels. If that level gets taken out it will then be up to the bulls to gather enough momentum to attack the USD 1703.40 wave high on the chart. This is where the trendline originated and it can be considered the main resistance zone before the market aims for the historical highs. 

On the RSI indicator, there has been a bullish trendline break marked by the red circle. This can also be considered a bullish signal. The market still needs to confirm the bullishness by making a higher high wave after the recent higher low was created. If it does it seems like the bulls will firmly be in charge of this market.