Gold markets continue to keep the uptrend intact. Over the last week, there was hardly any drastic move in the yellow metal prices.
But, the most significant drivers for the gold prices remained the Coronavirus outbreak and its impact on the overall global economy (weaker US Dollar).
Latest Coronavirus Updates
On Sunday, California health officials confirmed the 11th case of coronavirus in the United States. However, officials suggest lower risks for the US in this regard.
Meanwhile, the latest news showed that hundreds of hospital workers in HongKong have gone on strike, demanding the closure of the mainland China border. With rising concerns on the Coronavirus, China’s neighbors fear of virus spread. Hence, although the cross-border rail and ferry services have been halted, the health workers want a complete border closure.
Right now, other countries are denying entry to all foreign visitors who have recently been to China, people traveling from China, and the ones who have recently visited Hubei province.
PBOC Injecting Liquidity
Today, the Chinese Central bank – The People’s Bank of China (PBOC) – has injected 1.2 trillion yuan (~$173.3 bn) into its financial system via reverse repo operations. The Central Bank policymakers took this decision in order to balance the current vulnerable economic condition prevailing in China out of the virus outbreak.
Interim, the PBOC will keep an eye over the liquidity position of the nation and would adjust the macro liquidity when needed.
Uptrend stays intact on the daily chart. The XAU/USD pair was trading in the upper region of the Bollinger Bands, confirming the primary positive trend. Yesterday, the gold prices had risen around 10-15 pips. However, today, the accumulated gains got vaporized, bringing back to the early levels.
There is a strong support level near $1575.99, and it has rejected the bears quite a few times last week. At present, though the bears are consistently inducing downward pressure, the aforementioned support seems undisturbed and stronger.
Nevertheless, if this support gets broken, then that would allow the pair to enter the lower Bollinger Bands, pleasing the bears.
Until Jan. 26, the gold bulls were stuck inside a red Ichimoku Cloud, restricting the upside price actions. Despite this Kumo breakout, the prices remained stabilized and rose hardly 15-20 pips, touching $1592 level.
On the downside, the green Ichimoku cloud remains instilled, preventing any immediate pullbacks. The near term momentum was declining and approaching the 50 level mark. Hopefully, the momentum remains above 50 marks, staying proactive to support bulls in case of an unexpected upward move.
Although the Parabolic SAR hovers above the pair, it would be irrelevant to rely on it right now when the gold markets are choppy in nature.