Gold Price Analysis: Weekly and 4-hour chart analysis shows there could be slightly more pain to come

Fundamental backdrop

This week has been dominated by central banks. The market received the latest from the ECB and the Fed and both committed to doing what is nessacery to rebuild their respective economies with stimulus and recovery packages. 

Traders and investors have also been looking for details on the phased opening of the major economies. The UK will be hearing from PM Johnson about his phased plan and the US have already received some details from Donald Trump. Some of the European economies have already started to open up their shops and schools but there are still restrictions in many of the worst-hit nations and the market are looking towards Germany and France for more guidance. Germany have committed to reopening playgrounds, churches and zoo's but postponed the decision on schools. Meanwhile, in the UK, the prime minister gave his first televised address following his own recovery from COVID-19 stating the UK is now over the peak. This is welcome news and the public are now looking forward to more details about how he plans to open up the nation without risking the threat of a massive second wave. 

The latest death and hospitalization rates from the major economies are showing that the curve is slowing down. Even New York is showing that hospitalizations are now on a downward trajectory. Although in the US the confirmed US cases now climbed over the 1 million mark, nearly one-third of the world's total. Next week we are sure to get more information to see if this slowdown in hospitalization rates and deaths continue.

Technical picture (weekly & 4-hour charts)

This weeks candle close is looking like it will be an inside bar (bearish harami) candlestick pattern. This indicates there could be more of a pronounced retracement next week. There are more precise support levels on the 4-hour chart below the weekly chart but it seems that the bulls have just recently run out of steam. Looking closer at the technical indicators, you can see the relative strength indicator is showing a massive divergence. This is when the price waves make higher highs but the indicator makes lower highs. This divergence can indicate that bearish momentum is slowing down but it does not mean that the underlying uptrend is over. It could just be the case that the buyers are exhausted in the short term. The black lines on the chart are the main levels from when the price hit the all-time highs. As you can see, the price missed the weekly chart resistance and may take a run at it in the future once this consolidation period is over.

On the 4-hour chart you can see there has been a pullback today and the price has moved slightly higher. The 55 blue exponential moving average could provide some resistance and this level confluences with the previous wave low. Longer-term, the two circled Fibonacci retracement targets are 38.2% and 61.8%. These levels look like slightly stronger support zones and could stem any further downside moves, Elsewhere the RSI has moved into a more oversold zone, this tells us that the price is negative and there could be some more downside movement to come. On this timeframe, there seems to be the potential for a downside Elliott 5 wave move lower this could be part of the larger retracement picture we see in the weekly chart above. The gold market tends to be fractal in this way and respects the technicals very well. 

Additional levels