Gold markets might close the week on a negative note. The yellow metal prices had started the week with rejection from the $1589.98 resistance level, heading downside. And, today, in the Asian trading session, the prices dropped even below the previous week’s opening mark.
Quite surprisingly, that isn’t the case for the upcoming sessions as I look into the technicals, where the bulls have initiated their price actions. We’ll talk about that in more depth in the technical analysis section of this forecast article.
Quick Coronavirus Update
The latest update on Coronavirus suggested that this deadly virus could have spread from bats to humans through the illegal traffic of pangolins.
“This latest discovery will be of great significance for the prevention and control of the origin (of the virus),” South China Agricultural University, which led the research, said in a statement on its website.
Greenback getting Stronger
Last day, the USD Index had activated its uptrend, thrashing above its previous resistance – 98.06 levels. The Greenback has been nudging higher since Jan. 02, showcasing impulsive upside movements.
Earlier, the gold prices had displayed some strong moves from the effect of the coronavirus outbreak. But now, the current growth in the US Dollar has disallowed the yellow metal from accumulating further more gains. Hence, the gold markets continued to stay flat amid a robust Greenback.
Read more on this -> Gold Prices Flat as Stronger Dollar Counters the Effect of Coronavirus Outbreak
Since the start of 2020, the XAU/USD pair have had made several attempts to break below $1552.36 support level. However, each time the pair was rewarded only with rejections to the upper side. Now, as I retrace through the candlesticks, I see a strong uptrend that was intact beforehand.
So, as I connect the dots, I see a range-bound phase in the gold prices, representing a pause to the primary trend – uptrend. Even in the coming days, the bulls are projected to lead the gold prices, breaking through the previous resistance – $1589.98 level.
Meantime, the momentum remains near 60.63 level in the Stochastic Oscillator, strengthening bullish prospects. Needless to say, even if the bears get activated anytime, then the two-month-old slanting support would immediately get into action.
From the daily chart, I get to know that the primary trend is an uptrend. Now here, on the 4H chart, things become more evident. The XAU/USD pair has already taken a jump into the upper region of the Bollinger Bands, surpassing the center line of the indicator. With such a pivotal move, the yellow metal prices have tapped its upside potential.
Perhaps, the 50-day SMA that lies just above the pair seems to obstruct the north side path for the pair. Anyhow, the bulls must be able to make a breakthrough out of this near term SMA after gathering some extra power from the below lying 200-day SMA.