Gold Price Recovery Halted at 38.20% Fib Level After Plunge

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The gold price on Wednesday pulled back off the 38.20% fib level just below $1,950 to trade at around $1,910 after the latest round of US CPI data. The price of the yellow metal had plunged during the week to trade at around $1,861 off historical highs of about $2,075.

The yellow metal has since recovered from oversold levels of the 14-hour RSI in the 60-min chart to return to the normal trading zone. It continues to trade several levels below the 100-hour and the 200-hour SMA lines.

Gold Price Fundamentals Overview

Gold is trading at the back of a relatively busy period in the US market. This comes hot on the heels of another round of $2 trillion economic stimulus package. The coronavirus pandemic continues to affect the outlook of the global financial markets and the US is taking measures to ensure that the adverse economic effects to not last long. Analysts are already predicting that the base interest rate could stay close to zero for years before another hike is announced by the Federal Reserve. 

On Wednesday, US inflation continued to improve after the consumer price index for July came in at 267.72 up from 266.07. General CPI was up 0.6% (MoM) versus an expectation of 0.3%. The (YoY) equivalent beat 0.8% with 1%. On the other hand, CPI ex-food and energy beat the (MoM) expectation of 0.2% with 0.6%. The (YoY) equivalent beat 1.1% with 1.6%. On Tuesday, the US Producer Price Index for July also impressed after beating expectations.

Gold Price Technical Analysis (the 60-min Chart)

Technically, the price of gold appears to be experiencing strong bearish pressure after pulling back off historical highs. The price of the yellow metal is now pinned to the 23.60% Fib level on its way up after pulling back off the 38.20% Fib level om Wednesday.

The bulls will be looking to champion the recovery campaign by targeting short-term profits at around 38.20% and 50% Fib levels at $1,943 and $1,969, respectively. On the other hand, the bears will look to pounce for profits at around $1,885 or lower at 0% Fib level at $1,861.

Gold Price Technical Analysis (the Daily Chart)

In the daily chart, the price of gold appears to have pulled back sharply in the last few trading sessions. This indicates an abrupt change in the market sentiment. The price of gold is yet to fall back to the ascending channel down below. This indicates that the bulls still retain long-term control.

The bears will be looking to extend the current pullback towards $1,861 or lower to $1,745. On the other hand, the bulls will target quick rebound profits at around $1,978 or higher at $2,080.

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