The price of gold on Wednesday pulled back to trade at around $1,583 after another round of positive US manufacturing data. The gold price has been on a downward movement since peaking recently at around $1,640. It has now dropped below the 23.60% Fib level.
The price of the yellow metal is now pegged around the 200-hour SMA. The 100-hour SMA is a few pips higher. This creates a consolidative frame, that could result in a breakout. The latest pullback has pushed it closer to the oversold levels of the 60-min RSI.
Gold Price Fundamentals Overview
From a fundamental perspective, gold is trading at a time when the coronavirus pandemic is wreaking havoc across the globe. This continues to make income assets like stocks less attractive to investors while boosting the appeal of safe-haven assets like gold. As such, the price of the yellow metal has surged recently in response to the growing global crises.
However, with the US and many countries already making progress to get on top of the coronavirus pandemic, the gold price has since lacked steam to rally further. Furthermore, the latest US economic data has provided some optimism after the ISM Manufacturing PMI beat expectations.
Nonetheless, not all data released this week was impressive. The Dallas Fed Manufacturing Business Index fell to -70. Analysts had predicted a reading of 6.2. The S&P/Case-Shiller Home Price Indices for January also disappointed with a (YoY) change of 3.1% versus 3.2%. The Markit Manufacturing, ISM Prices Paid and New Orders Index also missed expectations.
Gold Price Technical Analysis (the 60-min Chart)
Technically, the gold price appears to have recently pulled back off an ascending pattern formation. The price of the yellow metal is also pegged by the 100-hour and the 200-hour SMA, which could restrict movement in the next few trading sessions.
However, looking ahead to a potential breakout, the bulls will target short-term profits at around the 23.60% Fib level at $1,598 or higher at $1,621. On the other hand, the bears will be looking to pounce at around 38.20% fib level at $1,570, or lower at $1,548.
Gold Price Technical Analysis (the Daily Chart)
In the daily chart, the gold price appears to have recently pulled off an ascending channel. This is the second time in the last couple of weeks, It shows a great resistance by the bears who are fighting to take long-term control.
They will be targeting long-term profits at around $1,518 or lower at $1,450. On the other hand, the bulls will target the next rebound in the price of the yellow metal at around $1,643 or higher at $1,700.