Gold prices rallied 0.7% on Thursday as concerns over an increase in the number of new coronavirus cases, buoyed demand for safe-haven assets. The risk premium in the capital markets moved higher allowing gold prices to shine. The dollar continued to trend higher, despite falling US yields which continued to trend lower. China fired two top officials in the center of the coronavirus outbreak after officials confirmed a record number of new infections.
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Gold prices moved higher pushing through resistance which is now seen as short term support at the 10-day moving at 1,569. Price action continues to flip flop but remains rangebound. Resistance is seen near the February highs at 1,592 and then the January highs at 1,611. Target support is seen near the 50-day moving average at 1,533.
Short term momentum has turned negative to neutral as the fast stochastic continues to chop around making buy signal after sell signal which is a sign of consolidation. Prices looked like they were poised to turn over but the increase in the outbreak has changed that dynamic. The movement is choppy which likely means that gold is going to consolidate. The RSI slid sideways to lower and is hovering in the middle of the neutral range and reflects consolidation. The MACD histogram is printing in the red with a flattening trajectory which also points to consolidation.
Chinese Officials Were Fired
China fired 2-top Communist Party officials in Hubei province, which is the center of the coronavirus outbreak, in the aftermath of news that 14,840 new infections were reported on Wednesday a 10-fold increase from a day earlier indicating that the epidemic is far from tapering off. The high-level firings of the Communist Party secretaries of both Hubei province and its capital of Wuhan, demonstrated Beijing’s disapproval of how they handled a threat that has since mushroomed into an epidemic killing more than 1,300 people and halting business across the country.