Gold Forecast:
- After suffering a steep decline in early March, gold has rebounded in earnest
- Moving above a recent high, gold can look to surmount the March 9 high at $1,704
- A break above the recent high around $1,704 would be an encouraging sign for bulls looking to pursue an extension higher
Gold Price Ascends as Stimulus Continues, March High Now in Focus
After suffering a steep decline in early March, gold has returned with a vengeance as central banks and governments continue to pump liquidity into the global economy and early signs the coronavirus outbreak is slowing have emerged. As a result, volatility has ebbed, and the panic-induced declines of gold have been largely undone. Now, the commodity can look to continue higher as investors seek safety from inflation in the form of the precious yellow metal.
Gold Price Chart: Daily Time Frame (March 2019 – April 2020)
Already, gold has retaken the March 26 high around $1,643 in an encouraging sign for further gains. Consequently, gold bulls may look to drive the metal to prior highs at $1,690 and $1,704 – the February 24 and March 9 highs respectively. In the days ahead, a break above either of these levels would be an early indication bullish appetite may persist, while a daily close above $1,704 would effectively establish a new higher-high in the larger picture and should open the door to further price gains.
In the interim, fundamental developments in the form of failed stimulus packages or central bank commentary could look to undermine gains, but the larger backdrop should remain constructive for gold moving forward. Should losses mount, traders may look for technical support at the $1,630 mark at which a trendline from 2011 exists. Secondary support may reside at $1,610, drawn off the January 8 swing high. Together, the levels will look to keep gold afloat before subsequent buoyancy is required around the $1,550 level. In the meantime, follow @PeterHanksFX on Twitter for updates.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
