Gold Set to Test 50% Fibonacci Retracement – Brace for a Breakout
Arslan Butt • 1 min read
On Friday, the yellow metal gold prices reversed as traders booked profits from a 1% hike in the last session. Still, gold had some support as rising attention across the rapid spread of coronavirus elevated expectations of rate reductions by major central banks. Gold is trading bearish now, down around 0.7% at $1,630.86 at the moment.
People are concerned there might be a call for some additional stimulus measures, so that means lower (interest) rates. Therefore, the bets increased that the US Federal Reserve would lower interest rates as early as by the following month to safeguard the economy from the virus’s impact.
Lower interest rates diminish the opportunity cost of owning non-yielding bullion like gold. Bullion has scored about 3% so far this month, its third continuous monthly increase. Prices hit a 7-year high of $1,688.66 earlier this week. GOLD fails to violate the double top resistance level of $1,660 and slips lower despite the fresh coronavirus outbreak cases in different countries.
Gold – XAU/USD – Daily Technical Levels
Pivot Point 1646.99
Positive fundamentals from the US economy, especially the Prelim GDP and improvement in the durable goods orders has played well for the US dollar, driving gold prices lower. At the moment, gold is breaking below the horizontal support level of 1,637 and it’s likely to extend its selling bias until 1,624 area. Closing of candles above 1,624 can drive bullish reversal, but the violation of this level can extend selling until 1,612.