There is potential for gold to hit the $2,000 mark this week if it maintains the bullish momentum with which it has started the week. However, some fundamentals are already weighing into price action for the day. These have the potential to constitute some of the headwinds to such a move.
After last week’s most significant weekly loss since March, gold price continues to trade below the $1950 price level. Gold price continues to face pressure as two news releases to ease market tensions hit the newswires from China. First, President Donald Trump extended the deadline for ByteDance to sell off its US TikTok operation from 45 days to 90 days, in a move that could slightly ease off US-China tensions. Furthermore, Chinese stocks surged Monday after liquidity injection from the People’s Bank of China (PBoC).
Last Friday, the CME Group reported that the open interest and volume on gold price futures contracted by 6,300,000 contracts and 114,000 contracts respectively, marking the 3rd consecutive trading session that both open interest and volume would contract. Gold has started the day 0.15% higher, trading at 1946.08 as at the time of writing.
Outlook for Gold Price
Gold price for today has found support at the 50% Fibonacci retracement mark from the 14 July swing low to the 7 August swing high. Upside targets may appear at the 13 August high at 1966.16, which is where the 38.2% Fibonacci retracement is found.
A break of price above this level allows the XAUUSD push towards the confluence of highs of late July at 1980.74, with the $2000 psychological resistance located just ahead.
On the flip side, a further downside move in the gold price has to find momentum from a break below the 50% Fibonacci retracement support, targeting 1918.68 initially. The 61.8% Fibonacci level at 1898.48 is the next downside target, with 1869.39 (12 August low) lining up beneath it as another potential target.