Gold price continually rising during these days as investors weigh the economic impact of the COVID-19 outbreak. We expect the price to continue its upward path this year due to low-interest rates; economic risk and global uncertainty. Meanwhile, there are chances the price will not create a higher high and will drop down to the Demand Zone. Silver prices also performed well last week, starting at $15.51 per ounce Monday (May 11) and growing by 6.4 per cent to $16.57.
Gold has a proven history of maintaining their value even in the volatile economy. The spot price of gold hit a record $1,923 an ounce in 2011 but never climbed to the $2,000 mark. Recently Bank of America Corp. raised its 18-month gold-price target to US$3,000 an ounce and previously the bank target was $2000.
Reasons driving gold prices higher
These are the few reasons why the yellow metal price rose around 2.4% last week;
- Global stocks selloff over disappointing economic data and US Fed chair Powell warned that the US could experience the worst ever recession as a result of the coronavirus pandemic.
- On Thursday the price surged to a three-week high following the disappointing US jobless claims reports.
- Gold price moved sharply higher on Friday after the US Retail sales in April tanked to a record low of -16.4%. This is the sharpest decline in retail sales ever due to the coronavirus pandemic.
- The price also supported by uncertainty following a renewed US-China trade war after Donald Trump threatened to cut off relations with China.
- The other main reason the gold price boosted by fears over a second wave of Covid-19 outbreak as global economies begins to reopen.
This week Gold traders and Investors will closely monitor the economic releases, including:
- Federal Reserve Chairman Jerome Powell to Testify On Stimulus Programs.
- Minutes from the Federal Reserve.
- Weekly report on US jobless claims and housing data.
- UK jobs reports, inflation and retail trade data.
$Gold Technical outlook
The technical scenario is absolutely bullish after the price breaks the triangle’s resistance that appears on the chart. Overall the movement remained bullish throughout the last week and the price settled slightly below the $1750 levels. The volatility is still strong while in the long term we expect the gold price will drop to below $1700 before the price push to above $2000. In the short term if the price breaks and closes above $1750 the next resistance will be October 2012 highs at $1,795. It should find strong resistance in the area of $1800 where the price has strong resistance. On the flip side, any pullback might now be seen as a buying opportunity. The expected trading range for this week is between $1718.00 supports and $1795 resistances.