Gold Price Gives Up Some Gains After Tapping Highest Level Since November 2012; What’s Next?

Gold price rallied to its highest price since November 2012 yesterday at $1,779.00. However, XAUUSD quickly gave up its gains and finished the day at $1,760.17 which was lower than where it opened at $1,768.04. Is this nothing more than just a pullback or should we brace for a reversal?

On the fundamental side of things, there has been little in the way of news reports. Lately, rising cases of coronavirus cases in the US has triggered a flight to safety to gold. Yesterday was not any different. The country still leads the number of confirmed coronavirus cases at 2.380 million. Yesterday, it recorded its highest single-day total of 34,700 since April.

With that being said, it is likely that the recent price action we’ve seen on gold price could be nothing more than just a pullback. Technicals also seem to support this assumption.

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Gold Price Outlook

The 4-hour time frame would show that gold price has retraced some of its gains to the area between the 23.6% and 38.2% Fib levels (when you draw the Fibonacci retracement tool from the low of June 18 to the high of June 24). A hammer has already formed which is widely interpreted as a bullish confirmation signal. If there are enough buyers in the market, we could soon see XAUUSD retest its multi-year highs at $1,779.00. If there is enough bullish momentum, gold price could head to its September 2011 highs at $1,920.60.

On the other hand, a close below today’s Asian session low at $1,753.25 may indicate that gold price could pull back lower. XAUUSD could fall to $1,748.32 where it could test support at the 50% Fib level and the rising trendline (from connecting the lows of June 5 and June 18). If support at this price does not hold, gold price may drop to $1,726.35 where it would test the 100 SMA and 200 SMA.