The $1550 level has clearly established itself as a level of support and is likely to play this role again should gold decline from its current levels, however should this level be broken, it is equally likely to provide some resistance to any future rallies.
Even with its drastic falls earlier last month from its seven year highs above $1600, the $1550 level stepped in and propped gold up. Towards the end of last year, gold surged very strongly to its highest level in seven years above $1610, after it exploded through the key $1500 level, which had been a significant level for several months. Prior to the surge higher, gold had moved very little trading right around the $1475 level, as it remained in a narrow range trading roughly between $1460 and $1480, where it has spent the best part of several weeks.
For around two months between September and October, gold settled around the key $1500 level, moving back and forth around this level, seemingly content to not move anywhere else, so this level is highly likely to provide some support should gold fall back that far in the future. It was well supported by the $1400 level around the middle of last year, and any time it moved lower, it was quickly bought up and supported, pushing it back above this level, which means at some point in the future, this level may also prop up gold.
Last week in its latest monetary policy report to the U.S. Congress, the U.S. Federal Reserve (Fed) said the likelihood of recession has declined and key risks have receded as a “moderately” expanding U.S. economy was slowed last year by weak global growth and a manufacturing slump. “Downside risks to the U.S. outlook seem to have receded in the latter part of the year, as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilizing, and financial conditions eased,” the Fed said. “The likelihood of a recession occurring over the next year has fallen noticeably in recent months,” the Fed added. The Fed remain very aware of the coronavirus and its possible impact on China and the rest of the world, keeping a close eye on it. After their most recent rates meeting where the central bank decided to unanimously hold its benchmark funds rate in a range between 1.5% to 1.75%, Fed Chairman Jerome Powell said, "Uncertainties about the outlook remain, including those posed by the new coronavirus. There is likely to be some disruption to activity in China and globally" from the virus. "It's too early to say what the effect will be" in the U.S. "We are monitoring it carefully.", he added.
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