Gold is trading at a multi-year high at the mid-session on Thursday, after the U.S. Federal Reserve announced a massive stimulus package to combat the economic toll of the coronavirus pandemic.
The precious metal opened the U.S. session sharply higher then accelerated to the upside after the Fed rolled out a broad, $2.3 trillion effort to bolster local governments and small and mid-sized businesses in its latest move to keep the U.S. economy intact as the country battles the coronavirus pandemic.
At 17:51 GMT, June Comex gold is trading $1739.70, up $55.40 or +3.29%.
In economic news, earlier in the session, data showed the number of Americans seeking unemployment benefits in the last three weeks has blown pat 15 million, with weekly new claims topping 6 million for the second straight time last week as the pandemic has abruptly grounded the country to halt.
In response to the surge in unemployment, the U.S. government is likely to pass another stimulus measure for out of work Americans. This move will also be supportive for gold prices.
Daily Technical Analysis
The main trend is up according to the trend indicator chart. A trade through $1742.60 signaled a resumption of the uptrend. The main trend will change to down if sellers take out the last main bottom at $1576.00.
The minor trend is also up. A trade through $1670.70 will change the minor trend to down. This will also shift momentum to the downside.
The next upside target is a steep uptrending Gann angle at $1768.00. Crossing to the strong side of this Gann angle and sustaining the move will put the market in an extremely bullish position.
On the downside, the nearest support angle comes in at $1672.00. It’s only been tested once. If it fails then look for the market to possibly retreat into a pair of uptrending Gann angles at $1624.00 and $1597.00.
Since the trend is up, buyers are likely to continue to come in on breaks into the angles. If the trend changes to down then it means that investors are looking for value. Professionals don’t like to chase new highs so we’re going to see periodic short-term corrections. However, the fundamentals support a long-term bullish outlook. The short-term outlook will be determined by traders who are willing to play both sides of the market.