The gold price has weakened from its recent highs above $1877 registered on November 16 and closed the week below $1800.
This precious metal’s price still remains under pressure, but concerns that the new variant of coronavirus could hit the economy may help Gold to advance again above $1900 resistance.
Safe-haven asset
Gold price closed the week below the $1800 level even though riskier assets have weakened as news of a new COVID variant makes investors around the world worried.
Gold is considered a safe-haven asset, and the price should advance if the pandemic situation worsens as investors look for safer places to invest their money. Alexander Zumpfe, a precious metals dealer at Heraeus, added:
Authorities globally reacted with alarm to the virus variant, with the EU and Britain among those tightening border controls as researchers sought to establish out if the mutation was vaccine-resistant. The gold price should remain supported in this environment, and the topic of (Fed) tapering should take a back seat for the time being.
The battle against the coronavirus is still not over; Austria imposed a nationwide lockdown while Germany’s Health Minister Jens Spahn said that Germany is also not ruling out a new lockdown.
On the other side, FED announced the tapering of its $120 billion in monthly bond purchases by $15 billion per month, and some investors believe a startling rise in consumer prices may accelerate the speed of raising interest rates.
The prospect of interest rate hikes positively influenced the U.S. dollar, and the appreciation of the U.S. dollar in the last several weeks had a negative influence on Gold.
Federal Reserve Governor Christopher Waller said coronavirus and supply problems may complicate the FED decision on monetary policy in 2022.
These problems may limit job gains and output growth, and if the U.S. dollar loses its value in the upcoming days, it could also help Gold to advance above the current levels.
$1900 represents strong resistance
Gold price has weakened from $1877 to $1778 since November 16, and the current price stands at $1791.
Those whose interest is to invest in commodities like Gold should consider that the price of this precious metal should advance if the pandemic situation worsens as investors look for safer places to invest their money.
The important resistance level stands at $1900, and if the price jumps above this level, it would be a signal to trade Gold, and we have the open way to $1950.
On the other side, if the price falls below $1750 support, it would be a firm “sell” signal, and the next target could be around $1700.
Summary
Gold’s price weakened from its recent highs registered in the third week of November but concerns that the new variant of coronavirus could hit the economy may help Gold advance again. Gold is considered a safe-haven asset, and if the price jumps above $1850, the next target could be $1900 resistance.
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from Market Analysis – Invezz
