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Gold Set to Test 50% Fibonacci Retracement – Brace for a Breakout

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

Support Resistance
1633.48 1658.64
1621.83 1672.15
1596.67 1697.32
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.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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