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Gold Price Nears 2020 Highs As Risk-Off Sentiment Dominates

Gold prices
Gold prices

Gold price on the XAUUSD chart continued to push higher for the fourth straight trading session as risk-off sentiment, and US Dollar weakness allowed the yellow metal to benefit from its safe-haven status. 

Risk sentiment worsened when the US Commerce Department said it would block Chinese company Huawei from getting hold of chipsets and semi-conductors that were produced with US technology. 

This situation poured fuel onto a fire of USD weakness which had been stoked when very dismal retail sales data was released. US Retail Sales and the Core Retail Sales fell into double-digit negative territory as the coronavirus-induced layoffs have left American consumers without extra spending cash, while businesses also remained closed. 

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Technical Outlook for Gold Price

The daily chart of the XAUUSD shows a bullish break of the symmetrical triangle on the back of fundamental push, allowing the gold price to aim for the 2020 highs, which also serve as multi-year highs. However, this bullish move must first overcome resistance posed by the April 16 and April 23 highs at 1738.54. Only when this is achieved will the pathway towards the highest price of 2020 seen on April be cleared. Successful clearance of the 2020 top also opens the door towards the peak of November 12, 2012 at 1753.29. The possibility of attaining the 1792.26 price level, which was seen on February 1 and October 1, 2012 remains.

On the flip side, the inability to break the current resistance at 1738.54 could allow gold price to pullback towards the breached symmetrical triangle’s upper edge at 1722.30. Below this level, support areas lie at 1699.17, 1680.24 and 1658.53. Only when gold price moves below 1680.24 would the upside move that stems from the triangle break be invalidated. This scenario could play out if risk sentiment improves in the market.

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