Gold price weakened has weakened from $1959 below $1800 since the beginning of January, and the current price stands around $1823. The global business activity is still under pressure, and as long the price is above $1800 support, there is no risk of the bear market.
Fundamental analysis: Risk aversion will likely prevail in the upcoming weeks
Gold price extended its correction from its highs registered in the first week of January, but despite this, gold price remains in an uptrend according to technical analysis. Increasing vaccinations keep financial markets in a positive mood, but there is still a long way to go before widespread vaccination.
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According to analysts, the global economy is expected to reach pre-COVID-19 levels within a year, but the risk aversion will probably prevail in the upcoming months. The U.S. Federal Reserve will support the economy for as long as needed and keep interest rates at low levels, which is positive news for gold prices.
The U.S. Federal Reserve chief Jerome Powell said that the real unemployment rate is probably closer to 10% than the 6.3%, which added a pitch of pessimism to financial markets.
The U.S. stock market is still supported by the fact that investors remain optimistic about the large U.S. stimulus package. The U.S. House Speaker Nancy Pelosi said last week that she hopes that Joe Biden’s COVID-19 relief plan could be approved by the end of February.
This Saturday, the White House asked China to make available data from the earliest days of the Covid-19 outbreak. China refused to give raw data on early COVID-19 cases to the WHO-led team, and it should make available its data from the earliest days of the pandemic. According to White House national security adviser Jake Sullivan, there is ‘deep concern’ about the WHO Covid-19 report.
“We have deep concerns about the way in which the early findings of the COVID-19 investigation were communicated and questions about the process used to reach them,” said Jake Sullivan.
Gold has weakened this February below $1800, but the scenario for the price of gold should be better as the “dovish” Fed decision continued to pressure the U.S. dollar. Gold price is expected to continue to be supported and could actually accelerate to the upside this February if the dollar continues to weaken.
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Technical analysis: $1800 represents a very strong support level
The price of gold has weakened from its highs in January, but according to technical analysis, as long the price is above $1800, this precious metal is in the “buy” zone. The important support levels are $1800 and $1700; $1850, $1900, and $2000 represent the resistance levels.
If the price falls below $1800, it would be a firm “sell” signal, and we have the open way to $1750. On the other side, if the price jumps above $1850, it would be a signal to trade gold, and we have the open way to $1900.
Gold price weakened has weakened from $1959 below $1800 since the beginning of January, and the current price stands around $1823. A sharp drop in new COVID-19 cases keeps the financial market in a positive mood, though the new coronavirus variants could make a problem again. Risk aversion will likely prevail in the upcoming weeks, and if the price jumps above $1850, it would be a signal to trade gold, and we have the open way to $1900.