- Gold is trading 0.30% higher on the session but there could be a lower high in the making.
- The chart is showing a potential rejection at the 61.8% Fibonacci retracement from the move lower.
Fundamental backdrop
Once again today (Wednesday) has been a risk-on session as the equities market shrug off reports that the Moderna drug tests have not enough data to go on. There was an initial drop after the news but since all of the US bourses trade over 1.5% higher and in the EU the Dax and the FTSE are also in the black. On Wednesday, after the stock market open the Moderna CEO did comment to say the FDA has given the company the green light to move over to phase two of the clinical tests. Gold has held up pretty well and is higher on the session but the bears are capping the gains at the 61.8% Fib zone which will be spoken about later in the article.
From central bankers, the main comments have been from the BoE. Governor Bailey stated that the UK will not rule out negative interest rates and they are looking carefully at the experience of other central banks. They are also looking to review the purchase of risky assets, this to me seems like they might be looking into the corporate debt ETF’s like in the US. Broadbent then took over to say that the recovery from the COVID-19 crisis won’t feel “v-shaped”.
Technical picture
Looking closer at the 4-hour gold chart you can see the price stopped exactly at the 138.2 Fib extension. Now there has been a subsequent move lower the retracement from this move is struggling at the 61.8% Fibonacci retracement. This aforementioned level is very close to the USD 1750.00 per troy ounce level and might become an important zone. If the bulls manage to barge through the zone a retest of the highs might be on the cards and if not we could see a deeper correction. The level to watch on the downside is the USD 1722.17 per troy once support. If there is a breach of that zone that would be the confirmation needed for the bears to push harder.
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Additional levels
