The correction in gold price accelerates today as the precious metal breaks below the 1,990 mark. No surprise here as the rally went to fast and to far making consecutive record highs on risk-on sentiment amid the rising number of coronavirus cases in many countries.
The recent rally in equities around the globe as the S&P 500 approaches all-time highs, and a drop in new coronavirus infections drove gold investors to take some profits off the table locking the gains from the rally in gold prices the last months.
As I have mentioned in a recent gold price analysis, the extreme overbought levels since July 21 increase the possibility of a rapid correction, at least until the precious metal will exit the overbought area.
The risks for the global economy still tilted to the downside, so the recent correction is just a technical correction as the fundamentals remain bullish for gold. Further stimulus from the governments and more monetary easing from central banks are still on the table and will continue to support the gold price.
Gold Price Daily Analysis
Gold price is 1.70% lower at 1,993, as the much-anticipated correction accelerates today. Gold price trades lower for third straight session something we haven’t seen since May. The move today drove the gold price outside the extremely overbought area, and we need to estimate the next technical levels to watch.
Looking at the daily gold chart, the first support is at 1,983 the daily low. A break below might challenge 1,966 the low from August 4. The next support stands at 1,904 the low from July 28.
On the upside, the initial hurdle for gold price is at 2,029 today’s top. More selling pressure would emerge at 2,052 the high from yesterday’s trading session. The next supply zone is at 2,077 the all-time highs.
Gold Price Daily Chart