· Gold prices rose on Wednesday after a steep fall in the previous session, as doubts about a stimulus package proposed by U.S. President Donald Trump to soften the economic impact of the coronavirus epidemic weighed on risk sentiment.
Spot gold XAU= was up 0.4% at $1,656.37 per ounce by 0242 GMT, having fallen nearly 2% on Tuesday on hopes for global stimulus measures. U.S. gold futures GCcv1 slipped 0.2% to $1,656.70.
The White House and Congress negotiated measures on Tuesday to bolster the U.S. economy and Americans’ paychecks against the epidemic’s impact, although there was no immediate sign of a deal.
· “Risk sentiment has turned sour ... the market is pretty disappointed by Trump’s delay of the stimulus package, which he had promised on Tuesday,” CMC Markets analyst Margaret Yang Yan said.
A central feature of the legislative proposal is payroll tax relief, although the extent and duration of the proposal were unclear.
· Asian shares and Wall Street futures fell as growing scepticism about Washington’s stimulus package knocked the steam out of an earlier rally. [MKTS/GLOB]
Benchmark U.S. 10-year Treasury yields drifted lower, resuming their march towards an all-time low touched earlier in the week, while the dollar fell against key rivals as nervous sentiment over the coronavirus epidemic persisted. [US/][USD/]
The dip in U.S. Treasury yields and the dollar supported bullion further, CMC’s Yan said.
The total number of infected cases in mainland China rose to 80,778 as of Tuesday, while more than 116,000 people have been infected globally.
· Central banks, meanwhile, were seen stepping up efforts to combat the economic fallout of the epidemic, with the U.S. Federal Reserve expected to cut interest rates during its scheduled policy meeting in the coming week. FEDWATCH
The Fed had already slashed its benchmark interest rate in an emergency move last week. Markets are also pricing in a rate cut by the Bank of England on March 26. BOEWATCH
· European Central Bank head Christine Lagarde will participate in a video conference of the EU’s 27 leaders to discuss measures to counter the virus impact, the Council of the European Union said in a tweet.
Lower interest rate reduces the opportunity cost of holding non-yielding bullion.
· Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD), fell 0.2% to 962.03 tonnes on Tuesday. [GOL/ETF]
· Gold Technical Price Outlook: XAU/USD Weekly Trade Levels
Gold prices have remained subdued despite massive swings in risk appetite this week as growing concerns over the Coronavirus breakout and the oil price war continue to drive market sentiment. The yellow metal is down nearly 1% after registering fresh seven-year highs at multi-year trend resistance and the threat remains for a deeper pullback while below this technical threshold. These are the updated targets and invalidation levels that matter on the XAU/USD weekly chart.
Initial weekly support rests at 1643 backed by the 61.8% retracement of the decline off the record highs at 1586. Broader bullish invalidation at 1522/26. A topside breach from here exposes the next major resistance confluence at 1733 backed by the 2012 high at 1795.
· Gold Price Technical Analysis
This month, gold price resumed its upward move above the $1,650 resistance against the US Dollar. The price gained bullish momentum above the $1,680 resistance and even broke the previous multi-month high.
The 4-hours chart of XAU/USD indicates that the price traded to a new multi-month high at $1,703 and it settled well above the 100 simple moving average (red, 4-hours) and the 200 simple moving average (4-hours, green).
Recently, there was a downside correction below the $1,680 level. The price traded below the 23.6% Fib retracement level of the upward move from the $1,562 low to $1,703 high.
However, there are many supports on the downside near the $1,650 and $1,640 levels. The main support is near the $1,632 and $1,630 levels (the previous breakout zone).
Besides, the 50% Fib retracement level of the upward move from the $1,562 low to $1,703 high is also near the $1,632 level to provide support. Therefore, dips in gold price remain supported near $1,640 and $1,630.
On the upside, the price could face hurdles near the $1,680 level, above which the bulls are likely to make another push above the $1,700 barrier in the coming days.
Looking at EUR/USD, the pair remains well supported above 1.1300 and 1.1250. Similarly, GBP/USD is likely to find a strong buying interest near 1.2920 if it further corrects lower.
· Elsewhere, palladium XPD= fell 0.6% to $2,404.58 per ounce, while platinum XPT= was up 0.8% to $875.37. Silver XAG= rose 1.3% to $17.08 per ounce.
Reference: Reuters, Daily FX, Action Forex
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