E Gold Price Bumpy Run Could Spill Over To Next Month

The price of gold (XAU/USD) on Wednesday bounced off the current support trendline just above the 200-hour SMA. It has since found strong resistance around the 100-hour SMA. This could result in a short-term consolidative pattern formation with the yellow metal tightly pegged within the two SMA lines.

Besides that, the yellow metal appears to be lacking a bias in momentum with the bulls slightly edging out the bears in the short-term battle.

Therefore, the bumpy run could continue through next month with gold price forecast analysts pointing incumbent geopolitical tensions as a major reason. Next week, the US non-farm payrolls for the first month of the year 2020 will also be out. This will further continue to disrupt the gold market in the short-term. 

Therefore, bullish traders will continue to target short-term profits at around $1,582 or higher at $1,595, just below the current multi-year high. On the other hand, the bears will be looking to pounce for profits at around $1,560, below the 100-hour SMA, or lower at $1,545.

The RSI indicator in the 60-min chart also shows that the bulls are just edging the battle against the bears in the short-term. The gold price recently dropped to the oversold zone of the RSI, but it has since recovered after a change in market sentiment. 

Fundamentals Overview

On Wednesday, the US Federal Reserve made the decision to keep the Funds rate unchanged at 1.75%. In return, the price of gold popped, then retracted to settle at around $1,570 later in the day. The Federal Reserve continues to target an interest rate range of 1.5% to 1.75% and no cuts or hikes are expected in the coming months.

Meanwhile, the coronavirus continues to affect Asian markets, and by extension, the global markets as fears of a global outbreak grow. Thousands have now been diagnosed with the deadly string of the flu virus while more than 100 have died, at the time of this writing.

On the other hand, with the US presidential elections on the horizon, campaigns have already started, albeit relatively muted at the early stages. They are expected to get hotter in the coming months thereby increasing uncertainty in the capital markets. This could provide the gold bulls with more ammunition as investors shift their investments to ‘safe-haven’ instruments.

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Disclosure: The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor does ...

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Susan Miller 3 months ago Member's comment

Uncertainty always sends people flocking to safe havens like gold. #Coronovirus was just declared a global emergency by the WHO. I #expect gold will skyrocket.

Maithya Kitonyi 3 months ago Author's comment

Me too, gold should skyrocket soon. After weathering the storm caused by big-tech earnings. The earnings season seems to be the only thing causing a disturbance in the price of gold. It should be flirting with all-time highs by now.