In the few weeks prior, gold had eased a little from its then eight year high around $1765 back towards the key $1675 level. At the start of May, gold rallied higher to reach an eight year high above $1760, again off solid support at $1675.
For the last four months now, gold has enjoyed solid support from $1675, and it has rallied off this level on a few occasions keeping gold near the highs. This is the most significant level presently and is highly likely to provide more support should gold decline, although it is now some distance away. XAUUSD has generally moved well in the last few months surging higher from three month lows around $1450 up to the current eight year highs. If the support at $1675 fails, it will return to a range where it has spent the best part of this year trading in. It spent around two weeks consolidating around $1600 after the first solid rally from near $1450 before pushing higher again.
Earlier in March, gold traded around the key $1500 level whilst touching $1450 on two occasions threatening to move lower, however it has since rebounded well. In the first half of March, gold fell sharply from seven year highs above $1700 and again the $1675 level stepped in and provided some support, while the $1600 level is also likely to provide some more support should gold decline from its current trading levels. The $1550 level has also established itself as a level of support and is likely to play this role again should gold decline from its current trading above $1700.
As the world continues to tackle the coronavirus pandemic, gold is enjoying a resurgence as investors flock to this haven. This has been supported by the recent two day meeting of the U.S. Federal Reserve (Fed) at which the Fed left their benchmark interest rate unchanged near zero. The pandemic is having an unprecedented impact on the global economy as significant concerns remain about the economic outlook for years to come. Coronavirus cases continue to surge in the United States, with four states reporting one-day records for virus-related deaths earlier in the week. Further, data on Tuesday showed that U.S. consumer confidence fell more than expected in July, which only underpins the significant economic impact from the virus. In the recent meeting the Fed had little choice but to reference the pandemic. “Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year,” the post-meeting statement said. “The path of the economy will depend significantly on the course of the virus,” the statement said. “It’s just such an important sentence, we decided it needed to be in our post-meeting statement,” Fed Chairman Jerome Powell added during his post-meeting news conference. “It’s so fundamental.”
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