Despite risk aversion dominating market sentiment, gold price is struggling to gain ground against the US dollar. Yesterday, XAUUSD retreated from its intraday highs at $1,744.15 and closed at $1,726.81, down from its opening price at $1,736.91.
Oftentimes, gold price would rally when risk aversion dominated market sentiment. This is because the precious metal is widely considered to have intrinsic value. Consequently, investors have always considered it a safe haven asset.
However, it would seem that the coronavirus pandemic has made safe haven currencies like the US dollar, yen, and franc more attractive alternatives to gold. The explanation for this could be that these currencies are more liquid than the precious metal.
With that being said, you should keep tabs on the technical setup of gold on the 1-hour time frame. As of this writing, XAUUSD is testing support at the rising trendline when you connect the lows of June 5 and June 10. This price, around $1,725.90, also coincides with the 50% Fib level when you draw the Fibonacci retracement tool from the low of June 10 to the high of June 11. Reversal candlesticks around this price could mean that we could soon see gold price retest its recent highs at $1,744.15.
On the other hand, a strong close below today’s Asian session lows at $1,722.04 would invalidate support at the siring trendline. It could suggest that there are still sellers left in the market that could possible push XAUUSD to its June 10 lows at $1,707.76.