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.