Gold price spent yesterday’s trading in a range after it skyrocketed on Tuesday. XAUUSD had a $19 range, bottoming out at 1,631.78 and peaking at 1,652.15.
The precious metal skyrocket earlier this week following the Federal Reserve’s rate cut. For the first time since the global financial crisis, the central bank conducted an emergency meeting to address the market’s and public’s coronavirus concerns. Fed Reserve Chairman Jerome Powell took markets by surprise when he announced a 50-basis point rate cut and not 25 basis points. Consequently, lower rates weakened the US dollar.
The technical setup of XAUUSD suggests that gold price may soon resume its rally.
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Gold Price Outlook
On the 4-hour time frame, gold price has spent the last few trading hours in consolidation. This follows after a strong bullish rally. Therefore, a bullish flag chart pattern has materialized. A strong break above yesterday’s high at 1,652.58 would be considered an upside break of the consolidation. It could mean that there may be enough buyers in the market to push price higher to the near-term resistance at 1,687.71.
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On the other hand, a close below the consolidation at 1,626.35 could mean that there is more downside for gold price. The daily chart shows that XAUUSD has found support at the rising trend line when you connect the lows of December 18, February 5, and March 2. A break below the consolidation would invalidate the bullish flag pattern and could mean that gold price would soon retest the rising trend line at 1,611.50.More content
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