On Monday, the precious metal gold surged over 1.5%, improving from its most significant one-day drop in almost seven years, on the odds for Fed fund rate cut by the U.S. Federal Reserve to diminish the economic impact from the coronavirus break.
On Friday, the yellow metal slipped dramatically by more than 4.5% for its most significant daily decline since June 2013 as traders liquidated positions to meet margin calls in other securities.
Monday has been a painful start to the week for some investors with further drop-offs in a variety of markets occurring at the market open.
It marks the 6th day of declines in a row, which we have not seen in some time, so traders should prepare themselves for the possibility that this week will likely be filled with negative data, driven by coronavirus fears.
Last week, coronavirus fear resurfaced, and this helped to trigger a good number of trend line breakout trades, which I hear that some of you have been able to catch.
The virus came back into focus late last week, and this tipped the U.S. major stock indices into negative territory; note how much of Saturday’s CNBC front-page was dedicated to virus-related issues.
XAU/USD – Daily Technical Levels
Pivot Point 1,597.26
On the technical front, gold has closed a bearish engulfing candle around 1,593. Typically such patterns trigger further selling in the XAU/USD, and we may see gold prices going after the next immediate support level of 1,580. Violation of this level can extend further selling until 1,572. Alternatively, the resistance stays around 1,602. Let’s consider selling trade under 1,597 today. Good luck!