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Gold has been falling since the start of the week. Despite the increase of the coronavirus fears, the precious metal – a well-known safe haven – depreciated. XAU/USD reversed down from the $1,700 area and dropped to $1,586 at the moment of writing (March 12, 16:00 MT time).
The primary reason of gold’s depreciation is technical correction. Earlier the price has risen to the highest levels since 2012, and that was simply too much too fast, so buyers took profit. The previous candlestick on the monthly chart looks very similar to the one currently forming at that timeframe. February’s candlestick has a big upper wick. This means that the price met resistance and wasn’t able to keep going up.
The natural question now is, “Will gold keep falling?”
The answer is, “Yes, the price may visit lower levels”. On the W1, there’s bearish divergence between the price and the Awesome Oscillator. A weekly close below $1,590 will produce a bearish engulfing pattern on the W1. Support is located at $1,557 (September highs) and 1,535 (100-day MA). The next key level on the downside will be at $1,500. Resistance is at $1,600 and $1,650.
Fundamentally, the reasons for higher gold prices are still here: the coronavirus uncertainty, the easing of monetary policy of large central banks. As a result, watch technical levels. If the signs of reversal to the upside appear at the mentioned support levels, consider bullish positions.
For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
United States Bureau of Labor Statistics will release monthly average hourly earnings, non-farm employment change (NFP), and unemployment rate on November 5, 14:30 GMT+2.
United States Bureau of Labor Statistics will release monthly average hourly earnings, non-farm employment change (NFP), and unemployment rate on October 8, 15:30 GMT+3.
The US Bureau of Economic Analysis will publish Core Personal Consumption Expenditures (PCE) on May 27 at 15:30 GMT+3.
The United States will publish the Preliminary GDP on Thursday, May 26, at 15:30 GMT+3.
The Reserve Bank of New Zealand will publish a monetary policy report and make an update on the interest rate on May 25, at 05:00 GMT+3.
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