Gold price: what’s the latest outlook amid Covid-19?
Gold has begun the week on a bullish note. Where do IG analysts see the commodity’s price going next?
Gold kicks off week on a high
Gold prices remained in bullish territory on Monday 13 July 2020, despite a brief dip in the earlier part of the session, as the number of Covid-19 cases kept rising over the weekend in parts of the world.
Gold contracts expiring in August 2020 are priced at US$1,814 each, based on the latest IG data. This represents an intraday increase of 0.5%, extending an uptrend that began last Saturday 11 July 2020.
IG's market analysis also show that 69% of client accounts with open positions in this market expect the price to rise, with the remaining 31% expecting the price to fall. 'Sells' also form 54% of all trades for the day so far.
The safe-haven commodity’s latest rally also came despite US markets closing on an optimistic note on Friday. The S&P 500 and Dow Jones Industrial Average each finished the day 1.05% and 1.44% higher.
Covid-19 infection rates keep up pace
On Sunday 12 July, over 190,000 new Covid-19 cases were recorded globally, with 58,439 and 29,108 infections notably reported in the US and India alone.
Brazil and South Africa also saw over 20,000 new cases each over the weekend.
Elsewhere, Australia’s Victoria state posted a seventh straight day of triple-digit new infections with 243 cases on Sunday. State capital Melbourne went into a six-week lockdown starting last Thursday 09 July.
Where next for the gold price?
Daily FX strategist Margaret Yang says that on a technical basis, gold prices have broken above an 'ascending triangle' that had been formed since end-March.
She added that the asset’s overall trend remains bullish as the 10-Day, 20-Day and 50-Day Simple Moving Averages (SMAs) ‘have formed a golden cross and are sloping upwards’.
‘Breaking out above the US$1,750 resistance has opened up room for more upside towards the next resistance at US$1,800 and then US$1,872 (161.8% Fibonacci extension),’ Yang concluded.
Meanwhile, IG market strategist Pan Jingyi noted that any short-term consolidation ‘should not be ruled out’, with the Covid-19 pandemic still deteriorating across the world, and ongoing US-China tensions still at play.
On Monday afternoon, China announced sanctions against US officials in response to the US’ sanctions against top Chinese officials over alleged human rights abuses in China’s Xinjiang province.
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