The price of Gold erases its gains made on Tuesday when it reached the highest level in two weeks, after the fear of the spread of a coronavirus in China that currently has killed at least four people.

Gold drops about $10 or 0.64% stumbling to $1,550.90; Silver eases 35.9 cents or 1.99% dropping to $17,707 per ounce, Copper drops 3.47 cents or 1.22% descending to $2.80 per pound.

Asian and European markets tumbled on Tuesday, driven by fears of the spread of a new virus in China, which could develop as an epidemic over the Chinese Lunar New Year holidays.
 Despite these fears, the price of Gold wiped out most of its profits and turned negative as the European and American sessions progressed.

Technical Overview

The yellow metal in its daily chart is developing a consolidation movement. This movement began after Gold reached $1,611.49 per ounce on January 8, 2020. 

Gold Daily

The big picture of Gold shows the price moving in a fifth wave that is still in progress. The impulsive movement that is active began on November 12, 2019, when the price reached $1,445.70 per ounce.

Thus, as long as the price action continues to move above $1,445.70 per ounce, the precious metal will maintain with a bullish bias.

The following chart shows Gold in a 4-hour range, developing a sideways movement bounded between $1,536.01 and $1,568.69 per ounce. 

Gold 4 Hour

After the vertical advance developed by the price during December, and based on the principle of alternation, we expect Gold to advance in a complex consolidation structure. This structure could be, for example, a triangular formation, or a combination of simple structures.

The latest CFTC report released last Friday revealed that institutional traders continue having a bullish sentiment in Gold futures. However, the institutional net positioning reduced by 0.95% compared to the previous report.

Gold Institutional net positions

The figure reveals that the extreme net positioning could be indicative of taking profit activity. In other words, the price action should look like a consolidation formation.

This activity could be confirmed with the side positioning reported by institutional traders, which reaches 86.75% in the long-side.

Gold Institutional Traders Positioning

In conclusion, because the yellow metal is entering a complex corrective formation, our vision for the med-term remains neutral.


Try Secure Leveraged Trading with EagleFX!

Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

GBP/USD jumps om Brexit, Bailey retreats on lockdown

GBP/USD  soared above 1.2850 after BOE’s Governor Bailey said mention to negative rates does not imply use. EU’s Barnier heading to London for informal trade talks. PM Johnson announces new restrictions, but no full lockdown


EUR/USD hits six-week lows below 1.1750 amid dollar demand

EUR/USD is trading at the weakest levels in six weeks below 1.1750 amid resurgent US dollar demand despite the upbeat market mood. Concerns over COVID-19 resurgence in Europe continue to weigh on the euro. 


Gold remains depressed near $1900 mark

Gold remained depressed for the second consecutive session on Tuesday. The downside remains limited ahead of the Fed Chair Powell’s testimony. The set-up still supports prospects for a slide back to August monthly lows.

Gold News

Crypto market shrinks while Bitcoin grows

Ethereum takes the brunt of the falls and gives market share to Bitcoin. Pause in the falls before looking for key supports at lower prices. Ripple plays dangerously and risks looking for support at the $0.20 level.

Read more

WTI: Trapped between key hourly averages ahead of API data

WTI (futures on NYMEX) consolidates the bounce above the $40 barrier, having regained the 21-hourly Simple Moving Averages (HMA), currently at $39.75.

Oil News

Forex Majors