Gold Price Bullish Momentum Above $1,700

The gold price trades higher on fears of a second wave of coronavirus infections after five new cases reported from Wuhan. Gold failed to break above the $1,725 twice the previous week amid the plans by many countries to reopen the economy. Gold rebounds today after two consecutive days of losses amid the rising trade tensions between U.S. and China.

U.S. President Trump said that he opposed renegotiating the U.S. – China Phase One trade deal. Meanwhile yesterday China banned meat imports from Australia as retaliation for Australia’s call to investigate the origins of coronavirus.

The partial reopening of the economies might pressure gold price, but if the increased number of coronavirus cases cancel the reopening for later, then gold would attract more bids.

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Gold Price Support and Resistance

Gold price is 0.43% higher at $1,703 recovering from early losses below $1,700. Bulls are in control, and as long as the price holds above the $1,700 mark, then another leg higher is possible. What can cancel the positive momentum is only a break below the 50-day moving average at $1,649. 

On the upside, minor resistance for gold stands at $1,705 the daily high. More selling pressure might emerge at $1,722 the high from May 8. A credible break above $1,722 might test the eight-year highs at $1,746 from April 14.

On the contrary, first support for gold price stands at $1,693 the daily low. If the gold price breaks below, the next support area will be met at $1,681 the low from April 7. Next level to watch on the downside is the low from May 1 at $1,671.   

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Gold prices are diving as the US trading session gets underway. The move lower in gold prices is fueled by a stronger US Dollar and US stock markets being near their all-time highs, lowering the demand for gold. However, the mood may change in the next few hours as the US ISM Non-Manufacturing Index is due.

Technically, gold prices are trading sideways between the October 11 low of $1473.68, and the October 25 high at $1518.41. The benefit of this well-defined rectangle pattern is that when the price finally starts trending the price should hopefully not look back and reach its target. The pattern also provides price targets.

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If gold prices were to trade above the October 25 high of $1518.41, then the price might be able to reach the $1563.14 level, as the difference between the upper and lower limit of the pattern is added to the October 25 high. On a break to the October 11 low at $1473.68, the price might be able to reach the $1428.95, as the difference in the range is subtracted from the October 11 low.

Time will tell if bullish or bearish traders will command price as the chart pattern itself is neutral in its outlook.

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