Gold price gave up some of its gains yesterday as the market’s appetite for risk improved on news of possible fiscal stimulus from the US. XAUUSD steadily traded lower from its opening price at 1,678.87 and bottomed at 1,641.64. By the end of the New York session, the precious metal had settled at 1,649.15.
US President Donald Trump’s remarks that the government may allow tax cuts put investors in a better mood. If this turns out to be true, the global economy could benefit from fiscal stimulus in the world’s largest economy.
On the hourly time frame, gold price looks to have formed a head and shoulders pattern. XAUUSD has already broken through neckline support. However, it is not unusual for the market to retest the neckline for resistance. Trading around 1,664.15, just below the 100 SMA, this is what XAUUSD looks like it’s doing. Reversal candlesticks at this price could mean that gold price may soon trade lower. A break of yesterday’s low at 1,641.64 could mean that the next support for XAUUSD is around its February lows at 1,565.00.
On the other hand, it’s worth pointing out the setup on the 4-hour chart. By drawing the Fibonacci retracement tool from the low of February 28 to the high of March 3, it’s possible that the recent fall in gold price is nothing more than just a pullback. It can be seen that XAUUSD bounced off the 38.2% Fibonacci level. A close above yesterday’s highs at 1,667.46 could mean that there are enough buyers in the market to push gold price to its March 9 highs above 1,700.00.More content