Gold price finished the last two trading days of last week with losses. This followed after XAUUSD tapped $1,817.77 which was the highest level it has traded since September 2011. As of this writing, the precious metal has been trading steadily higher from its opening price of $1,797.87 to $1,803.19. What can we expect next for gold price?
Fundamentally speaking, concerns over the US economy caused by rising coronavirus cases in the country drove bids into XAUUSD. The latest numbers reveal that the total active cases in the US is now at 3,302,665 and hospitalizations in certain states like Texas and Florida are approaching maximum capacity. Investors are worried that the trend in infection could force the government to once again implement lockdowns which could then weigh on the economy.
Over the weekend, US President Donald Trump was seen wearing a mask for the first time in public. Most analysts are interpreting this development as positive for risk appetite because it could convince people in the US to begin wearing masks which could help limit the spread of the coronavirus.
Technical Analysis
However, the recent price action on gold price suggests that this news has done very little to temper bids into gold price.
On the 4-hour time frame, it can be seen that the uptrend on XAUUSD is still intact. This is evidenced by the fact that the commodity is still trading well above the rising trendline (from connecting the lows of June 5, June 18, July 2, and July 7). If gold price is not able to sustain its initial rally from this morning’s trading, XAUUSD has some room to trade lower to $1,794.22 where it could test the rising trendline for support. This price also coincides with the 38.2% Fib level (when you draw the Fibonacci retracement tool from the low of July 2 to the high of July 8). Reversal candlesticks at this price could indicate that XAUUSD may soon retest its multi-year highs at $1,817.77.
On the other hand, a strong bearish close below $1,790.50 could invalidate the uptrend on gold price. Consequently, it may mean that XAUUSD may soon fall to its July 2 lows at $1,757.25.
It is also worth noting that the precious metal has already bounced off the 38.2% Fib level. This could also be a sign that gold price may no longer need to pullback any lower and that the commodity could soon resume its rally.
Gold Price, 4-Hour Chart
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