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Gold Price Tests Strong Support at $1863 After Volatile Week

Gold prices
Gold prices

Gold saw a small bounce on Tuesday after Monday’s collapse on news of a potential vaccine. The price reversed again on Wednesday to test the key $1863 support and the price action here will define the next path forward for the precious metal.

Gold has been a beneficiary of the coronavirus chaos as safe demand soared. Economic turmoil across the globe and a huge rise in government and central bank largesse has supported gold this year and the price was on its way back to $2000 before this week’s drop. Traders were pricing in further stimulus with no real end to the lockdowns in sight, but this scenario has now changed.

The U.S. election is still hanging in the background and this will have some bearing on gold prices. A Joe Biden Presidency is expected to see higher taxes and larger government expenditure, especially on the Green New Deal. There is potential for the U.S. to return to expensive foreign wars, which would unsettle the Middle East once more. The Trump campaign is currently pushing for recounts with one set to go ahead in Georgia and Trump was also confirmed as winning the state of Alaska.

Today sees important data for bullion with the release of inflation data from the U.S. economy. German inflation released earlier today came in as expected at -0.2% pointing to continued deflationary outlook in the Eurozone. The U.S. is expected to see a 0.1% dip to 1.3% in core prices, which include food and energy, while the core figure is expected to grow by the same amount to 1.8%.

Gold Price Technical Outlook

Gold saw a small bounce from the Monday crash on Tuesday but has fallen again on Wednesday. The positive for bulls is that the price hasn’t closed below the $1863 support level, which saw lows in late-September and October. The path forward in the near-term will hinge on the small range between the $1875 resistance and $1863 support. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.

Gold Price Daily Chart