Gold Price Analysis: The 1-hour chart points to a deeper correction

Fundamental backdrop

After a slow start to the week, there has been some choppy price action in equities. During the EU session the DAX and FTSE traded higher but as soon as the US session opened the major bourses hit the floor and the Dow trades around 1.68% in the red. This is despite the news that more economies give us more clues about opening up their shops and schools. However, White House economic advisor Kevin Hassett commented that the US unemployment rate could hit between 16- 20% by the end of June. Hassett also went on to say that more stimulus is being considered for US citizens and the GDP fall for Q2 will be big. In the UK, PM Johnson says that the government are looking to provide more guidance on the lockdown by 7th May. It seems that business and transport services are struggling and the government are looking to ease some of this pressure.

Italy also reported 2,091 new cases vs 1,739.
New York COVID-19 death toll rises +1.9% to 17,638 (prev. +2.0% at 17,303).
UK COVID-19 cases rise to 161,145 (prev. 157,149) and the death toll rises to 21,678 (prev. 21,092); deaths rise by 586 (+2.78%) vs. yesterday's increase of 300 (+1.74%).

Later in the week, we can look forward to hearing from the Fed and the ECB. Both have provided ample liquidity to the market. There has been lots of support to the markets but the latest guidance from companies during the current earnings season is dire. Adidas have said they expect a 40% drop in sales. IAG have said they will have to work on around 12000 workers redundancies. So the economic impact is clearly not over and it could be good for the gold bugs.

Technical picture

The hourly chart below is showing that USD 1700 per ounce is a tough nut to crack. The main support point is just under at the USD 1692.4 and if this breaks it could indicate a move to lower levels. If the aforementioned level does break then the purple support level could be the next target for the bears. Conversely, if the green trendline breaks to the upside then the wave high at USD 1736.47 could be the resistance to watch. The higher timeframes are also showing signs of bearishness as the chart rolls over to the downside but the uptrend remains intact until a lower high lower low wave formation forms.

Additional levels