Gold Price Forecast – Slight Correction Expected

Gold

Gold continues to gain for four days in a row. The death tolls from coronavirus had crossed that of another past outbreak – Severe Acute Respiratory Syndrome (SARS). Hence, the investors went upset with the rising death tolls and took the yellow metal value upwards after exiting their equity positions.

Perhaps, the investors might soon reshift towards global equities as China slowly gets back to work.

Coronavirus Updates

Until now, the coronavirus outbreak has killed more than 900 people, with the majority from mainland China. Also, global supply chains have raised concerns about the extended closure of businesses in the second-largest economy.

Anyhow, the Chinese government has now eased its regulations, allowing people to work. Banks have reduced their interest rates to re-lend Companies with money to resume production. Therefore, things might get well soon, boosting the global stock markets.

SPDR Gold Trust Holdings

In contrast, the world’s largest gold-backed ETF SPDR Gold Trust (GLD) has increased its gold holdings by 0.3% to 916.08 tonnes. And, at present, GLD has its highest holdings in the yellow metal since Oct. 29.

GLD 1 Week 10 Feb. 2020
GLD 1 Week 10 Feb. 2020

However, I expect a slight drop in the GLD share price by the end of this week. On its daily chart, I notice the formation of a hanging man trading pattern, which is a bearish reversal pattern. Needless to say, the downside might only be a potential correction, which would rebound soon after testing the $145.08 support mark.

Technical Analysis

1-Day Chart

The narrowing of the Bollinger Bands indicator signals the slowing down of the overall volatility in the upcoming gold prices. On the upper side, the maximum point to reach would be $1589.98 mark.

XAU/USD 1 Day 10 Feb. 2020
XAU/USD 1 Day 10 Feb. 2020

The XAU/USD pair has made a recent move into the upper region of the Bollinger bands. Hence, the volatility might remain within the upper region, trying to keep the uptrend intact for a shorter time frame.

On the momentum side, the Stochastic Oscillator isn’t revealing much weakness in the pair’s price actions, indicating near 66.57 level.

4-Hour Chart

XAU/USD 240 Min 10 Feb. 2020
XAU/USD 240 Min 10 Feb. 2020

Here, on the 4H chart, the bulls appear to struggle in order to make an impulsive upside move. Currently, though the Parabolic SAR remains below the XAU/USD pair, cheering the gold bulls, the trend might reverse soon. The Parabolic SAR has almost reached near the pair from downside and might jump above it soon, pushing the prices down.

Any potential south side movements would immediately activate the below-lying slanting support line.