$GC $XAU $GLD $USD
Gold futures in New York soared for a 2nd session running Tuesday on continued reaction to the Fed’s extraordinary measures to help an economy ravished from the coronavirus pandemic and demand/supply issues.
The Fed revealed Monday several programs including lending against student loans, credit card loans and US government backed-loans to small businesses.
Gold investors should be concerned about is the number of USDs the measures are injecting into the financial system. More cash floating around generally leads to a weaker Buck and consequently more foreign demand for USD-denominated gold.
Although US stocks did not rally immediately on the news, they did Tuesday, dampening the need to sell in gold to raise money to meet stock-related margin calls.
At 17:38 GMT, June COMEX gold is trading 1663.00, +90.30 or +5.74%.
The main trend is down in gold, but momentum has shifted to the Northside. The trend will turn up on a trade through the multi-year high at 1707.80. A trade through 1453.00 signals a resumption of the downtrend.
This rally started when gold found support inside its contract 50% to 61.8% Fibo retracement zone at 1473.00 – 1417.50 on 16 March at 1453.00.
The short-term range is 1707.80 – 1453.00. The rally accelerated earlier Tuesday when the market crossed to the strong side of its Fibo retracement zone at 1610.50 – 1580.40. This zone is new support.
Usually, when the trend is down, sellers come in on a test of the 1st Fibo retracement zone down from the last main Top.
In this case, 1580.40 – 1610.50 is the Fibo retracement zone and 1707.80 is the main Top. The sellers come in because they are trying to form a secondary lower Top, which is a pretty strong sign that the shorts are taking control of the market.
But, Tuesday, pent up buyers blew out the short-sellers attempting to make the secondary lower Top. So, a combination of new buying and short-covering led to the spike in prices.
If buyers have regained control of gold then they will defend 1610.50 – 1580.40 it will become support.
This is the zone to focus on now.
Have a healthy day, stay home!