On Wednesday, gold is keeping bullish momentum over rising coronavirus death toll hammered risk sentiment. At the same time, the trader awaits the announcement of the U.S. Federal Reserve’s policy conference minutes for hints on additional stimulus measures. Gold edged 0.1% to $1,650.40 during the U.S. session.
One of the reasons behind gold’s bullish bias is ongoing tensions around the globe. The UK PM Boris Johnson is in ICU, which is driving uncertainty from the British markets. Moreover, Japan’s Prime Minister Abe has announced a state of emergency in Tokyo and 6-other provinces and plans to control the economic fallout of COVID-19 as well as a huge fiscal stimulus package. The package, worth ¥16.5trn, equates to 20% of GDP.
Meantime, European leaders are discussing policy tool-kit, which has probably worth up to €540bn (3.8% of GDP). However, it will be interesting to get a broad agreement between European leaders on the debt mutualization plan since the very nation is introducing stimulus plans, which makes their currencies weaker. Consequently, traders switch to precious metal gold.
Daily Support and Resistance
Pivot Point 1,651.78
Gold prices are trading with a bullish bias around 1,649 level, having supported over previously violated ascending triangle resistance become support level of 1,636. We can see a series of neutral candles over 1,636 level, which is suggesting indecision among traders. However, the upward trendline and 50 periods EMA on the 4 hour time is demonstrating a chance of bullish trend continuation in the market.
On the higher side, gold may find immediate resistance around 1,655, and bullish breakout of this may offer buying until 1,671. While support continues to hold around 1,636. Let’s consider taking bullish trades over 1,640 levels to target 1,662 and 1,671. Good luck!