Gold Price Analysis: Next up USD 1700 per ounce as upside targets keep getting hit
- The price of gold shot higher today after another round of high jobless claims data.
- USD 1700 is the next logical target for the bulls and technical levels have been working nicely.
Fundamental backdrop
Gold moved another wave higher even as stocks rallied today following the news that 6.606 million new jobless claims had been made over the last week. This is the 3rd week in a row the number has come higher than forecasts but the number was marginally lower than the 6.867 million last week. There was also the news that the Federal Reserve will add an additional action to provide up to USD 2.3 trillion in loans to support the economy they went on to say they will keep monitoring markets to see if more help is needed
The precious metal has been in serious demand as the damage from the economic shutdowns is being felt in the US. The dollar index is currently 0.66% lower on the session and this is really helping the boost in the yellow metal.
In terms on today's latest COVID-19 numbers:
Italy COVID-19 cases rise 2.9% to 143,625 (Prev. 139,442). In the UK COVID-19 the death toll rose 12.4% to 7,978 (prev. +15.2% at 7,097) and lastly, in New York COVID-19 death toll rises by 12.7% 7,067 (prev. +14.2% at 6,268).
Technical picture
Gold has been conforming very nicely to the technicals of late and Elliott Wave and Fibonacci have been partially useful. In this recent up wave, the price has followed the 5 wave pattern higher to the letter. The only issue is now that we could be leading into a massive wave 3 with the sud divided waves in the middle. If this does end up being the case the bull targets will be way above the USD 1700 resistance level that is next on the hit list.
On this 4-hour chart below the price has moved into the ascending triangle pattern. There is a serious probability that the price could accelerate beyond the pattern to the upside but then the top of the pattern could be used as support. The 161.8% extension target has not been met just yet so keep an eye on a small short term pullback there. The red rectangle was the 76.4% retracement and once broken the market used the level as a support zone.
The longer-term Fib extension targets measuring the wave from USD 1703.27 to 1451.30 take the 138.2% extension to near USD 1800 and the 161.8% close to USD 1860.00. In the future is the price continues to rise these levels need to be watched.
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Additional levels
Author
Rajan Dhall, MSTA
FX Daily
Rajan Dhall is an experienced market analyst, who has been trading professionally since 2007 managing various funds producing exceptional returns.
