Gold has been gaining strength in recent weeks as the stock markets continue to shiver in the cold of uncertainties arising from the spread of COVID-19. The precious metal stalled on the week ending April 24 just as it seemed to be making preparations to rise to the highs. The price moved 0.79% lower during the American session but still held above the $1,700 level.
It was an eventful week in the general macro markets as risk sentiment flip-flopped from one day to the next. In that context, the Dow seemed set to close lower for the week down almost 3% at the time leading into the close.
The oil sell-off dominated earlier in the week and then there followed many other challenges that include the Eurogroup failing to agree; Gilead’s drug allegedly not performing well in China and the BoJ stimulus bonanza.
Coronavirus issues still persist although it appears like the death rates and hospitalizations are gradually slowing down. That mostly has happened due to the procedures being put in place. Once these restrictions are lifted medical experts say that they are expecting a second wave of infections and even deaths.
Many issues linked to the lockdown are coming to the forefront. Transport companies have struggled during this time with some in the United Kingdom seeking bailouts from the government. The retail sector has been damaged significantly along with the restaurant business.
It will take months or even years for the full cost of the coronavirus pandemic and various analysts think that the forecasts happening currently do not represent the full picture of the damage it has caused to the global economy. If that is the reality, gold may rally to new all-time highs with some analysts saying that it may hit $3,000 in the next 18 months.
The gold proponents failed to push the precious metal past the recent wave high of $1747.82. The price somewhat slid off on April 24. But, the price is still comfortably above the $1,700 level. Looking at the 4-hour chart the price stopped at the 76.4% retracement level. That may indicate the beginning of a new wave 1-2 to the lower side.
Nonetheless, more confirmation is necessary to confirm that this and that would be a break of the previous wave low located at $1,661.18. Looking at the daily chart, the RSI indicator shows a massive divergence in the past three price waves higher. That is a negative sign and may mean an upside momentum may be slowing down.
In the case that the trendline breaks to the upside there might be a great chance that the uptrend may resume towards $1,800. All support and resistance levels are from the duration that gold made a significant run-up to almost $2,000. All these levels are currently quite useful.
In general, the price is still in an uptrend and up to the moment when the previous wave low has been smashed, the bulls still rule the markets.