Gold price has tanked very hard and is fast heading towards the $1900 price level, as yields on 10-year US bonds surge. A significant factor behind the exit of money from the safe-haven asset has to be today’s announcement by Russia on the commencement of the vaccinations against the coronavirus, marking a feat that has come well ahead of all expert predictions.
The announcement has sparked a lot of enthusiasm that other vaccines would soon hit the market, which would put a lid on the global pandemic, allowing the global economy to recover and risk-on sentiment to return.
Gold is trading 4.6% lower on Tuesday and is challenging the 50% Fibonacci retracement level traced out on our daily chart of yesterday. In yesterday’s analysis of gold price action, I had indicated that prices had risen too steeply, setting up the yellow metal for the kind of correction we are now seeing on the chart. However, the medium-term and long-term sentiment on gold price remains bullish, and it is likely we could see areas of demand cropping up soon on the asset; just not at the moment.
Outlook for Gold Price
The XAUUSD daily chart shows the technical price levels to watch for. Price is already way below the $2,000 mark and continues to pressurize the immediate support zones. Price is challenging the 50% Fibonacci retracement from the swing low of 14 July to the swing high of 7 August. Today’s move extends the outside day formation, which formed
following the bearish engulfing pattern of last week. A breakdown of the 50% retracement level at 1932.32 targets the 61.8% level at 1898.48, where we also saw previous highs on 23/24 July. 1868.70 (23 July low) lines up as further support to the south.
Conversely, a bounce from the 50% Fibonacci level targets the 1966.16 price level (38.2% Fibo level), with 2008.04 and 2050 (10 August high) forming the next upside targets. 2075.14 (all-time highs) remain the level to beat for those who wish to ride gold prices further, in pursuit of price targets set by the likes of Goldman Sachs recently.
Gold Price Chart (daily)