Gold Price Analysis: Investors could be getting complacent and gold is great barometer

Fundamental backdrop

Today, equities markets have continued to rally as the acceleration in new cases and deaths slowed again in Italy and Spain. Italian COVID-19 cases rose to 135,586 vs the previous of 132,547 and the death toll rose by 604 to 17,127. This makes a decent difference in percentage terms.

In the UK, Prime Minister Boris Johnson has been admitted to hospital and put in intensive care after his condition worsened. He contracted the coronavirus around 10 days ago now but it seems that the situation has got worse and the UK leader had trouble breathing. Elsewhere, cases in the UK rose 10.7% to 55,242 (prev. +8.4% at 51,608), the death toll also pushed to 6,159 (prev. 5,373). Another steep rise. 

Surprisingly, the whole market seems to be looking forward to exit strategies. I feel like this is slightly premature and there is still some downside left to come. In Austria and Denmark, there has been an announcement that some schools and shops may open but we are far from that in the UK and the US. The economic impact of the closures have not even been reported by companies and corporations. Retail and housing names must have taken a massive hit, so I feel it will be best to wait for more information before jumping on the equities bandwagon. 

Technical picture

Looking at the 4-hour chart, the price has consolidated at a pretty high level. If the bullishness in equities continues then the price might fall. Interestingly, the USD will also fall as the coronavirus trade inspired USD strength. The USD 1640.00 level is a decent support level to watch as it has been used on six occasions and seem reliable. Even if it does break it will tell you a lot about the state of the market and the perception of the safe-haven asset. Longer-term the resistance level to watch remains to be USD 1700. If investors feel the worst is still yet to come a break could happen and even an eventual test of USD 2000. The internal trendline in black is the point where the price has stopped at the moment. The black line underneath could now be the next support zone. In the medium term, this could play out as more information is being gathered about the virus growth rates in the US. The chart is still a bullish one and the bias will not change until a lower high is created and USD 1640 is broken to the downside.

Additional levels