After yesterday’s drop, gold price continues to be under selling pressure today on news coming out of China.
Gold price dropped yesterday following news that breakthroughs have been made in the coronavirus vaccine. XAUUSD fell from an intraday high of $1,562.12 to $1,547.28 after Sky news reported that a vaccine was going to be tested on animals as early as next week. In a separate report, Zhejiang University announced that they already have an effective drug to cure the infection.
While the reports were not further confirmed and did not exacerbate the slide in XAUUSD, positive data from the US limited any upward movement on gold price. The ADP non-farm employment report came in at 291,000 versus the 157,000 forecast. Meanwhile, the ISM non-manufacturing PMI report for January topped the 55.1 forecast at 55.5.
Gold price was still unable to make any bullish headway in today’s Asian session. China announced earlier that it would cut tariffs off some US goods by as much as 50%. It was also reported that this could happen as early as next week, February 14.
All of these developments were bearish for gold price because the previous metal is considered as a safe haven asset. When market sentiment improves and risk appetite dominates trading, investors seek higher-yielding assets and often disregard gold.
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Gold Price Outlook
On the daily time frame, we can see that gold is still trading around its previous highs. The area around $1,552.70 is where XAUUSD peaked on August 23 and September 4. Yesterday’s candlestick closed as a spinning top where could indicate that there may still be buyers in the market. On its own, it is considered as a neutral candlestick pattern. However, because it formed at a support level hints at a more bullish bias.
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On the hourly time frame, we can see that gold price needs to trade past resistance around $1,560.25. This price coincides with yesterday’s highs and the 23.6% Fib level when you draw the Fibonacci retracement tool from the high of February 3 to yesterday’s low. Reversal candles around this price would invalidate the bullish assumption I discussed earlier. Instead, we could see gold price slide to its next floor which is around $1,535.47 where it bottomed on January 14.More content
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