Gold Price Analysis: Refreshes multi-year high above $1,750 on Powell’s comments
|- Gold prices remain on the bids near the highest since late-2012.
- Fed’s Powell shows readiness to act, rules out the risk of the US entering a second great depression.
- US-China tussle, coronavirus outbreak add to the bullion’s safe-haven demand.
Gold takes the bids near $1,755.30, intraday high of $1,756.08, amid the early Asian session on Monday. In doing so, the bullion refreshes the highest levels marked since November 2012. Comments from the Fed Chair Jerome Powell recently seem to have put a fresh bid under the yellow metal. Also favoring the safe-haven demand could be the US-China tension that is escalating to another worrisome level.
Despite ruling out negative rates and risks of the US slipping into another great depression, Fed Chair Jerome Powell also cited fears of the US unemployment rate hitting 20-25% peak. The Fed leader additionally cited that the central bank’s ability to use landing programs at disposal.
Read: Fed’s Powell: Fed is not out of ammunition, can do more if required – 60 Minutes interview
On the other hand, US President Donald Trump tried to paint a rosy picture of the world’s largest economy’s recovery from the virus-hit days. The Republican leader recently said that the number of coronavirus cases is strongly trending downward throughout the US.
It’s worth mentioning that the latest war of words between the US and Chinese policymakers have propelled the market’s rush to risk-safety.
While US President Trump signaled preparations of a ‘super-duper’ missile, China’s Global Times’ Editor Hu Xijin called the dragon nation to develop its nuclear arsenal. The world’s top two economies earlier jostled over the virus outbreak and then the flight diverted to the trade deal between them. However, the latest move seems to be a serious one as indicting a war-like situation.
Even so, the market’s risk-tone remains positive with the S&P 500 Futures gaining 0.80% to 2,870 with the US 10-year Treasury yields staying positive around 0.643% by the press time.
Moving on, traders will keep eyes on the US-China headlines, while also focusing on the virus updates, amid a light economic calendar in Asia except for Japan’s Q1 2020 GDP.
Technical analysis
An ascending trend line from Wednesday, around $1,757/58, can offer an intermediate halt during the bullion’s run-up to the year 2012 high near $1,796. On the downside, a short-term rising support line near $1,740 can offer immediate rest during the pullback, a break of which could recall $1,700 on the chart.
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