Gold Eyeing 1600 As Bulls Take Control on Coronavirus Troubles
Gold price (XAUUSD) is eyeing 1600 as bulls appear to have taken control of the market on St.Valentine’s Friday trading. Gold price is trading at 1582 after the coronavirus-related fears refuse to go away.
Gold is also benefiting from unconvincing retail sales figures, which met the consensus numbers but failed to spur the markets, leading to broad-based weakening of the US Dollar. The US markets are also trading lower as investors continue to keep an eye on coronavirus headlines, which are presently more of a lack of progress in containing the outbreak rather than increasing spread on a global scale.
Gold price action on the XAUUSD weekly chart shows that the yellow metal is trading within the confines of a symmetrical triangle, which has been the consolidation pattern that has held up prices after January’s surge took prices above the descending channel.
The technical expectation is for a price breakout in the direction of the other trend, but two factors may mitigate against this occurrence. The first is the divergence pattern on the chart, which shows price forming higher highs as the RSI indicator creates lower highs, with a failure swing attached to it. The second is the bearish harami pattern which defines the price action of the last two weekly candles.
If the price obeys the technical picture on the weekly chart for XAUUSD, then the gold price may be set for a retreat which will breakdown the candle and open the door towards 1494.18 in the medium-term as the initial target. 1475 and 1462 also present themselves as possible areas of support if the triangle breaks down.
However, if the price gets a lift from safe-haven demand, then gold price activity could break out of the triangle’s upper border, which provides an opportunity for a retest of 1611 (seen recently for the first time in 6 years on 6 January. The previous high of 11 June 2012 at 1635 remains a viable medium-term target as well.