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Gold backs-off from fresh US session high in series of hourly lower lows and lower highs

  • Gold stabilising at a 50% mean reversion (1625), morphing into bearish consolidation. 
  • Markets await US President Trump's response to the coronavirus spread. 

As we head into the spot market close for Wednesday, on another bearish coronavirus New York session, gold has been selling off since the $1,689.30 highs printed earlier this week and has started to consolidate between $1,624 and $1,658. The range for the day has been between $1,625.09 and $1,655.10 but a series of lower lows and highs is not a healthy foundation for the bulls at this juncture, although fundamentals lean with a bullish bias as US stocks remain on the backfoot into the Wall Street close. 

The coronavirus remains a concern due to the rapid spread beyond China to all corners of the world. The latest data shows that there are around 81,300 confirmed global cases while Mainland China, South Korea and Italy lead the scales of national epidemics.

All eyes on the White House and Trump presser

We are waiting to hear from US President Donald Trump today who will address the nation in a press conference where it is expected that he will play down the recent rhetoric from US health advisors, such as yesterday's comment from Anne Schuchat, principal deputy director of the CDC, who said, “Current global circumstances suggest it’s likely this virus will cause an pandemic.” 

Upon returning from an overseas trip to India, Trump complained that media outlets were "doing everything possible to make the Caronavirus look as bad as possible, including panicking markets, if possible," misspelling the name of the virus. He then criticized the pushback from Democrats on the administration's response to the outbreak and added, "USA in great shape!"

The event takes place after the Wall Street close, (scheduled for 2330GMT), so it will not be until tomorrow that US stock markets will react on the White Houses response to the sudden outbreaks, however, gold will be on to monitor which trades twenty-three hours a day from 2200 GMT until 2100 GMT on the daily charts. 

No bidders in gold left on the market

"Dry-powder analysis suggests that per-trader positioning has never been this extended, which now poses a significant risk for a rush-to-the-exits. We identify reasons to believe that the narrative has reached a widespread consensus, with more traders long than ever, each of whom holds an outsized position, leaving nearly no traders left short,"

analysts at TD Securities explained. 

Gold levels

This is a corrective pullback from recent solid gains that pushed prices to a seven-year high earlier this week, although the series of lower highs and lows is signalling a bearish continuation while below 1660 resistance structure. A break of 1625/20 (50% mean reversion level) opens risk to 1610 (61.8% Fibonacci) and then 1595, 1588 (78.6% Fibo) before a full retracement to 1561 recent lows. 

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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