Gold price saw very little action in yesterday’s trading as market participants get a feel for developments surrounding the coronavirus. XAUUSD traded to an intraday high of $1,610.80 only to give up all its gains during the European session. By the New York close, it had settled at $1,589.29, a mere 2 cents below its opening price.
Yesterday, risk appetite picked up slightly on optimism that central banks would put up a concerted effort to stimulate global growth. The RBA did announce a rate cut earlier today. However, there is skepticism if other major central banks would follow suit.
Today, market participants are looking forward to a statement from G7 leaders. If the proposed measures to counter the effects of the coronavirus fail to impress, XAUUSD could trade higher. On the other hand, if measures announced impresses, risk appetite could weigh down gold price.
The hourly chart of XAUUSD shows a symmetrical triangle. This chart pattern is often considered as a neutral indicator. On the 4-hour chart, we can see that gold price is also stuck in a consolidation. It is bouncing off between support at the 200 SMA and resistance at the 100 SMA.
For those bearish on XAUUSD, it can be argued that the price action on gold price is nothing more than just a pullback. By drawing the Fibonacci retracement tool from the high of February 27 to the low of February 28, we can see that XAUUSD pulled back to the 50% Fib level. A break below yesterday’s low at $1,583.79 could mean that gold price may still fall to $1,562.73. If support there does not hold, the next floor could be at $1,563.23 where XAUUSD bottomed on February 12.
Meanwhile, a strong close above yesterday’s high at $1,610.77 could mean that there are still buyers in the market. Gold price may soon then rally back up to its recent highs at $1,689.00.More content