Gold Price Forecast: More easing in the docket to keep boosting the metal

• Spot gold near multi-year highs amid more easing coming.
• The bright metal is only behaving like a safe-haven when looking at the bigger picture.
• Bullish potential points to an extension towards $1,800.00 and beyond.   

Gold prices recovered their shine this past week, with spot gold soaring to $1,740.00 a troy ounce, not far from the multi-year high reached in the previous week at $1,747.45. The bright metal advanced on to main factors. One is that the coronavirus crisis continues to hit economies, with no clear end at sight. The second is that several policymakers and lawmakers are announcing stimulus packages to boost economies. Easy money rushed into safety.

More cash aid in the US and the EU

The US Congress has passed another relief package this week, totalling $484B, the fourth aid bill meant to alleviate the effects of the coronavirus pandemic.

European leaders, on the other hand, have been discussing a “recovery fund,” although they did not come to an agreement just yet. The main issue is how they would finance such a package and how it would later distribute it. German’s Chancellor, Angela Merkel, said that it needs to be “huge,” but the lack of agreement only highlighted the lack of union within the Union.

The commodity ignores the seesawing market’s mood, and is quite logical, as optimism is nowhere to be found. The coronavirus crisis is here to stay, with slow and painful improvements in the related curve numbers granted extended lockdowns. For sure, several counties have reported re-opening strategies, which are meant to be a prolonged return of economic activity.

Macroeconomic figures fuel demand

Dismal US data has only fueled demand for the metal, whatever it’s the effect on equities, as the market seems to be pricing in more easing coming ahead. These next days, the US Federal Reserve and the ECB, both will have monetary policy meetings. None is expected to touch rates, but all policymakers are expected to reaffirm their commitment on doing whatever it takes to keep economies are afloat.

The US will include in its macroeconomic calendar next week the first estimate of Q1 GDP. The report itself tends to have a significant impact in the financial world, and this time will be exacerbated by the ongoing crisis. The US economy is expected to have shrunk by 4.1% in the three months to March, partially reflecting the effects of the pandemic. The number seems a bit too optimistic and could be even worse.

Spot Gold Technical Outlook

Spot gold eased from its weekly high amid some profit-taking ahead of the weekend, anyway retaining its bullish stance. The weekly chart shows that it has extended further above a firmly bullish 20 SMA, while technical indicators have accelerated their advances, now nearing overbought readings.

In the daily chart, technical indicators have lost their bullish momentum, but remain within positive levels, rather reflecting Friday’s slide than suggesting further declines ahead. The metal flirted with a bullish 20 DMA at the beginning of the week, meeting buyers around it. The indicator now stands at around 1,670.

Resistance for the upcoming days come at 1,747, the multi-year high, en route to 1,795.80, the high from October 2012. A break through the 1,800 figure will only exacerbate the bullish momentum of gold. Supports, on the other hand, come at 1,700 and the mentioned 1,670 price zone.

Gold Sentiment Poll

The FXStreet Forecast Poll offers a neutral sentiment when it comes to gold, as the commodity is seen stable above 1,700 in the three time-frame under study. The number of bulls and bears is equal in the weekly and quarterly perspective, with those unable to make up their minds representing 50% in the 1-month view.

Nevertheless, the Overview chart paints a different picture. Moving averages continue to head firmly higher, with targets up to 1,900 in the upcoming weeks. The positive momentum is stronger in the monthly view and eases in the longer-term. Anyway, higher gold prices are still at sight, with a bottom perspective of 1,600.

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