Gold Price Analysis: Bounces from $1,670, but bias remains bearish
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- Gold's daily chart is flashing a bearish candlestick pattern.
- The yellow metal is stuck in a falling channel on the hourly chart.
Gold is currently trading near $1,678 per ounce, having printed a session low of $1,670 an hour ago.
The bias remains bearish despite the price bounce, as the hourly chart bearish channel is intact. Additionally, the daily chart is reporting a bearish doji reversal pattern, which comprises a doji candle near or at market tops, a sign of bull fatigue, and a bearish follow through in the form of a red candle on the following day.
The yellow metal created a doji candle on Thursday and fell by over 2% on Friday to confirm a bearish doji reversal.
All in all, the path of least resistance appears to be on downside and prices could fall to $1,650 in the short-term. That said, the long-term bias remains constructive with the metal likely to pick up a bid on potential coronavirus-led risk aversion.
Many observers believe the stock markets are not out of the woods yet and could face renewed selling pressure due to ever strengthening prospects of a prolonged economic downturn, strengthening haven demand for the zero-yielding metal.
“Just one of the reasons is the stock market crisis. During times of uncertainty, precious metals shine. For many young investors, this is the first time they have experienced sharp drawdowns in their passive, index driven portfolio. In the months to come, we expect these young investors to appreciate the capital preservation powers of precious metals,” said Ken Lewis, CEO of OneGold & APMEX.
As of Friday, the S&P 500 was reporting over 25 percent gains on the low of 2,192 registered on March 24.
Hourly chart
Daily chart
Trend: Bearish
Technical levels
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