Without any fresh catalyst, gold price consolidated throughout yesterday’s trading. XAUUSD traded between $1,575.63 and $1,586.04 before finishing the day at $1,581.61, around $2 higher than where it opened.
Except for the German Ifo Business Climate report, the forex calendar was blank for major reports yesterday. The Wuhan coronavirus continued to linger and dictate market sentiment. However, without any significant updates from WHO, governments, and key officials regarding the disease, movement on gold price was limited. Gold tends to benefit from fears because risk aversion highlights the precious metal’s safe haven status.
Today, only the consumer confidence report from the US is due. It does not tend to spark volatility in markets. This means that we will likely see gold price trade according to market sentiment. Worrying fears about the coronavirus will likely push XAUUSD higher. On the other hand, reports that the infection is being effectively contained could drag gold price lower. For real-time updates, make sure you constantly check our coronavirus page.
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Gold Price Outlook
On the hourly time frame, we can see that gold price spent yesterday’s trading in consolidation after its drastic rally on Friday. Consequently, XAUUSD has formed a bullish pennant. In forex trading, this chart pattern is considered as a bullish continuation pattern. A close above yesterday’s European session highs around $1,586.05 could mean that gold price may soon rally. Near-term resistance is at $1,595.36 where the precious metal topped on January 8, 2020.
On the other hand, a close below yesterday’s low at $1,575.68 would invalidate the chart pattern. It may suggest that gold price would pull back. Using the Fibonacci retracement tool and drawing from the low of January 23 to yesterday’s high, we can see that XAUUSD could retrace some of its gains to the 61.8% Fib level. This price, $1,568.68, coincides with gold’s previous highs. If support there does not hold, it can trade a little lower to $1,565.40 and test support at the 100 SMA and 200 SMA. This price also seems to coincide with the rising trend line from connecting the lows of January 21, January 23, and January 24.
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