Gold Price Forecast – Choppiness To Continue

Gold Bars

Gold prices remain flat on Monday. With every update on the Coronavirus outbreak, the gold bulls continue putting their best efforts to keep the gains intact. Meantime, the virus has killed more than 1700 people and infected more than 70,000 people, proliferating fears.

China with New Stimulus Measures

The Chinese economy which is the world’s second-largest economy has slowed down, displaying Coronavirus impacts. At this point, China’s Central Bank – People’s Bank of China (PBOC) has cut its interest rate on medium-term lendings to support the disrupted businesses. PBOC has lowered the rates by 10 bps, from 3.25% to 3.15%.

Following the rate cut announcement, the Chinese stocks rallied, showing the resilience nature of the stock market.

Before this rate cut on medium-term lendings, the PBOC had also injected liquidity in the economy by cutting reverse repo rates. In this way, China is playing out all possible ways to offset the overall effects of the Coronavirus outbreak on its economy.

However, with improvement in the traditional stock markets, the gold prices might likely undergo plunges or hold onto the current support handles in the upcoming sessions.

Meantime, the US Dollar Index continued to hover near its 2020 highs without showing any significant signs of weaknesses. Needless to say, even a growth in the Greenback would add more spike strips on the upward path to obstruct the gold bulls.

Technical Analysis

1-Day Chart

The XAU/USD pair was moving in the upper region of the Bollinger Bands. That means the uptrend continues to remain intact on the daily chart. However, I notice a slight decline in the overall momentum from its overbought territory near 80 level.

XAU/USD 1 Day 17 Feb. 2020

XAU/USD 1 Day 17 Feb. 2020

Currently, the Parabolic SAR which remains above the XAU/USD pair might soon jump below the pair, reversing the near term price actions. Hence, chances of a bit upward movement can be expected with a follow-up of the ongoing consolidation mode. Therefore, on the upper side, focus on the next immediate resistance instilled near $1592.09 level.

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