The gold price inched higher on Monday as risk-off sentiment returns amid the rising tensions between U.S. and China amid threats from President Trump that might impose a fresh round of tariffs on retaliation for the spread of COVID-19 outbreak. Mike Pompeo in an interview said there was a significant amount of evidence that the coronavirus outbreak emerged from a Chinese laboratory in Wuhan, but did not dispute U.S. intelligence agencies’ conclusion that it was not human-made.
Last week gold lost almost 1.6% on positive news from the remdesivir clinical trials that boosted investors sentiment. The Federal Reserve left interest rates at 0% – 0.25% and reiterated to do what it takes to support the economy.
Worries for a deep global recession due to the coronavirus outbreak rise as dismal economic data coming from around the globe has shift investors attention to safe-haven assets. Weak economic data from economies around the globe paint a dismal picture from global growth. Last week millions more Americans filed for initial jobless claims benefits the previous week as layoffs are spreading to many industries. In Europe, the manufacturing PMI’s came to worse levels since 2009 as the lockdown intensified in April.
Download our Q2 Market Global Market Outlook
Gold Price Analysis
Gold price is 0.59% higher at $1,708 managed to rebound from Friday’s lows. The sharp bounce today cancelled the negative momentum that started the previous week amid the reopening optimism. The technical picture is bullish for gold as it hovers above all major daily moving averages. Long positions are sitting comfortably as long as the gold price trades above the $1,700 mark.
On the upside, first resistance for gold stands at $1,714 the daily high. More selling pressure might emerge at $1,727 the high from April 27. A convincingly break above $1,727 might test the eight-year highs at $1,746 from April 14.
On the flip side, initial support for gold price stands at $1,685 the daily low. If the gold price breaks below, the next support area will be met at $1,671 the low from Friday. Next level to watch is the April 21 low at $1,657.