Gold Back Over Trend Line Support, More Upside To Come?

A close above $1595 could point to another leg higher for gold

FED 5

Gold is trading over 0.9% higher and has pushed overt the $1600 mark, as it attempts to pare some of Friday’s losses. 

Safe haven
Gold has had an interesting reaction to coronavirus. The price of gold trended steadily higher as coronavirus fears increased flows into safe haven assets. Gold advanced in every trading session par 5 across the month of February. Friday was one of those losing sessions. On Friday, despite coronavirus risks remaining high, gold sold off sharply in a serious bout of profit taking. The price slipped through trend line support, testing the 50 sma before rebounding. 

Easing monetary policy
Gold is once again climbing higher after the Federal Reserve hinted that it could ease policy in a bid to shore up the US economy in the face of risks posed by the coronavirus outbreak. The BoE and BoJ alluded to the same, whilst the group of 7 finance ministers (G7) said they would use all appropriate policy tools.
The prospect of the Fed and its peers easing monetary policy is music to the ears of gold bugs. In a lower interest rate environment, the opportunity cost of holding non -yielding gold declines, boosting demand for the precious metal.

Level to watch
Gold is trading 0.9% higher, crucially pushing back over the ascending trendline which began last December. A close above the said trend line could initiate another push higher. 
Immediate resistance can be seen at $1605 (today’s high) a breakthrough here could open the door to $1611 (yesterday’s high) prior to $1650 (Friday’s high).
Immediate support is at $1595 (trend line) prior to $1575 (yesterday’s low) and $1569 (50 sma).

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.