Gold futures are soaring shortly before the regular session on opening amid plunging U.S. Treasury yields and a steep drop in demand for higher risk assets. The catalysts behind the rally are concerns the coronavirus is spreading out of control outside of mainland China after South Korea raised alerts to there “highest level” in response to a jump in coronavirus cases.
At 11:06 GMT, April Comex gold futures are trading $1688.90, up $40.20 or +2.43%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier on Monday when buyers gapped above Friday’s high at $1652.10. The main trend will change to down when sellers take out the last swing bottom at $1564.40.
A change in trend is highly unlikely given the strong upside momentum. At this point on the chart and in the rally, the only thing long investors have to fear is a closing price reversal top. Pay no attention to overbought oscillators. They are meaningless and coincidental indicators. The only sign of an overbought market will be when traders stop buying and sellers take control.
Daily Technical Forecast
The upside momentum will continue on a move through the intraday high at $1691.70. The first upside target is the psychological $1700.00 level. The nearest upside objective is a steep uptrending Gann angle at $1734.90. It’s just a target, however, I wouldn’t call it resistance.
On the downside, the first target is the intraday 50% level at $1673.10. This will move up as the market moves higher.
If $1673.10 fails as support then look for the selling to possibly extend into the price gap at $1654.60 to $1652.10. This is followed by Friday’s close at $1648.80 and a steep uptrending Gann angle at $1647.10.
Turning lower for the session will put the market in a position to post a potentially bearish closing price reversal top with the next target angle coming in at $1620.40.
This article was originally posted on FX Empire
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