Gold Price Analysis: Bears take a breather after the $30 drop


  • Gold extends its corrective slide into the third day
  • Rebound in the US dollar and Treasury yields likely weigh.
  • Coronavirus fears-led risk-off fails to support gold bulls.

Despite the recovery attempts, gold (futures on Comex) remains heavy below $1650, having tested the key support around $1640 region in the last hour.

The prices consolidate the steep declines, as the bulls seem to have found some support from the World Health Organization (WHO) Chief Tedros’s comments. Tedros finally declared the fatal respiratory illness as a pandemic, as the outbreak tightens its grip across the US and Europe. Over 117k people have been infected globally by the virus.

The safe-haven gold ignores the risk-aversion seen across the global equity markets amid growing concerns over the rapidly spreading coronavirus globally. Meanwhile, a lack of concrete economic stimulus package from the US to battle the outbreak also failed to impress the gold bulls.

The main driver behind the almost $30 drop in gold prices from the European session’s high of $1671.45 to the recent daily lows of 1642.75 is the solid rebound staged by the US Treasury yields that has eventually lifted the greenback broadly higher. The US benchmark 10-year Treasury yields jump nearly 8% to regain the 0.80% level while the US dollar index hit a fresh three-day high of 96.61, up 0.15% so far.

Further, adding to the negative sentiment around gold, holdings in the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, slipped 0.2% to 962.03 tonnes on Tuesday. Meanwhile, investors continue to lock in gains in the precious metal after the surge to the highest levels in seven years on Monday.

Markets look forward to the US House coronavirus relief bill and the European Central Bank’s (ECB) monetary policy outcome for near-term trading impetus while coronavirus-related sentiment will continue to play a pivotal role.

Gold technical levels to watch

XAU/USD

Overview
Today last price 1646.30
Today Daily Change -2.93
Today Daily Change % -0.18
Today daily open 1649.23
 
Trends
Daily SMA20 1623.25
Daily SMA50 1586.1
Daily SMA100 1532.91
Daily SMA200 1495.38
 
Levels
Previous Daily High 1680.76
Previous Daily Low 1641.98
Previous Weekly High 1692.34
Previous Weekly Low 1575.58
Previous Monthly High 1689.4
Previous Monthly Low 1547.56
Daily Fibonacci 38.2% 1656.79
Daily Fibonacci 61.8% 1665.95
Daily Pivot Point S1 1633.89
Daily Pivot Point S2 1618.54
Daily Pivot Point S3 1595.11
Daily Pivot Point R1 1672.67
Daily Pivot Point R2 1696.1
Daily Pivot Point R3 1711.45

 

 

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