Gold Price Rallies to New 7-Year Highs as Coronavirus Hits Global Growth

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The gold price on Friday extended current monthly gains to hit a new 7-year high of $1,648 amid increased fears on the impact of coronavirus. The price of the yellow metal continues to enjoy strong bullish momentum despite recently slipping into overbought levels.

The price of gold now has bulls targeting new multi-year highs last witnessed in 2013. The 100-hour SMA has crossed above the 200-hour SMA, which supports a bullish case. The pair appears to have made a bullish breakout off a consolidative wedge at the start of the week.

Gold Price Fundamentals Overview 

From a fundamental perspective, the price of gold is trading at the back of some key developments in the global markets. Last week, the coronavirus fears appeared to cool down amid increased optimism on containment. However, fresh cases have been reported this week, which shows that the world is far from getting control of the deadly virus. This has sparked the current bull-run the gold price amid increased buying. More investors are now taking safety measures by investing in safe-haven metals.

Besides the coronavirus impact, gold is also gaining because of a lack of notable economic events to boost the US dollar. The latest economic data appears to be mixed. On Wednesday, US building permits and housing starts for January beat expectations. Producer price index ex-food and energy also impressed on a (YoY) basis. On the other hand, the Philadelphia Fed Manufacturing Survey smashed the expectation of 12 with 36.7 on Thursday.

However, on Friday, the Markit Manufacturing and Services PMIs came short of expectations while the PMI composite was in line. Existing home sales for January narrowly beat the expectation of 5.43M with 5.46M.

Gold Price Technical Analysis (the 60-min Chart)

Technically, gold appears to be trading under intense buying pressure. This indicates the existence of a short-term bullish bias in the market sentiment. The price of the yellow metal recently made a bullish breakout off a consolidative wedge, which sparked the current bull-run.

Therefore, the bulls will be targeting short-term profits at around $1,650 or higher at $1,660. On the other hand, the bears will hope for a quick pullback towards $1,637, $1,620 or lower at $1,600.

Gold Price Technical Analysis (the Daily Chart)

In the daily chart, the gold price appears to have recently made a sharp bullish breakout off a consolidative symmetrical triangle formation. Gold is now trading well inside overbought levels of the RSI indicator in the daily chart, which shows a long-term bullish bias in the market sentiment.

Therefore, the bulls will be targeting long-term profits at around $1,670 or higher at $1,700. On the other hand, the bulls will target any surprise pullback profits at around $1,600, or lower at $1,585.

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