Gold Price Analysis: Price action is tentative at the intraday support zone of USD 1642.00

Fundamental backdrop

Gold is trading sideways on Tuesday as equities push higher once again. Today has been one of many COVID-19 headlines and it kicked off with the Eurogroup not being able to agree on a deal to fund relief surrounding the current coronavirus related economic woes. Later in the session, there were some comments from French Finance Minister Le Maire who stated: "there is an agreement with German and other countries that we need an EU fund to finance economic recovery". He then went on to say an agreement is needed within 24 hours and failure is not an option. 

Just as the US session began we also heard from Fed member Evans who was sounding upbeat. He said, "We could see an economic recovery in H2 if health conditions allow it". It seems that stock markets are buying this optimism as the US bourses and EU indices trade in positive territory. 

With a more realistic tone, the SwissGovernment said that the countries GDP could drop by as much as 10.4% in 2020. Its is a scenario many analysts agree with and even in the UK, there are some rumours that the lockdown could be extended for another month. 

Relating this all back to gold, if the lockdown is extended especially in the US there could be more upside on the cards. Italy still has not managed to reduce the number of new cases and deaths as the nation reported 542 new coronavirus deaths (Prev 604), 3863 new cases Vs 3039 the highest in 3 days and lastly, 139,422 total cases, with a total of 17669 deaths

Technical Picture

The hourly chart below is still a bullish one. The trend is still higher with the higher highs and higher lows still intact. The green support zone on the chart at USD 1640.00 is the level to watch as if we get a breakthrough there then lower levels could be targeted. On the upside, the red resistance zone at USD 1674.15 is the wave high that the bulls need to target. The good news is the price is still above the 55 and 200 moving averages and the RSI is above the mid-level tilting higher. The RSI trendline break is also a good sign and if the price continues to move higher it shows that we are currently now near an overextended or overbought position. 

Additional levels