Gold is breaking higher again and is now eyeing the $1688 spike high and beyond. We remain bullish of gold medium-term and see any weakness as a chance to buy.
With renewed fear and volatility escalating over the impact of Coronavirus on the US, bond yields are plummeting, the dollar is under pressure and gold is a big beneficiary. The correlation between the falling US 10 year Treasury yield and the rally on gold seems to be re-asserting now.
Non-farm Payrolls today could mean that focus is taken off Coronavirus, even for a brief period of time, so expect some further prices volatility around 1330GMT. However, the bigger picture of further dovish actions central banks to come, negative real yields remains gold supportive. Gold is likely to remain a favoured asset class at least until the whole outlook for global economic supply and demand can be appraised with any clarity.
As we continue to say, the one main caveat for gold moving higher during these times of high volatility whether portfolios are subjected to a renewed bout of margin calls which would drive forced selling pressure on gold. Even then, stability should provide the next chance to buy.
- $1660 – 27th February high
- $1651 – 4th March high
- $1631 – 23.6% Fibonacci retracement of $1445/$1688, also 4th March low
- $1688 – multi-year high, 24th February high
- $1695 – January 2013 high
- $1754 – November 2012 high
Gold has taken another step forward and the bulls are firmly in the driving seat now. Another strong and decisive positive candle has seen gold close at its highest level since January 2013. The intraday spike high of $1688 from a couple of weeks ago is the next level to be tested, but beyond that, the way is open once more into the $1700s. Momentum is increasingly strong once more, with the RSI into the mid-60s, whilst MACD and Stochastics lines both advance encouragingly. There is certainly upside potential in this move too. The market has been ticking higher initially this morning, but as we approach the European session, the gains have been slightly pared. We see weakness as a chance to buy, with the hourly chart shows initial support band $1651/$1660.