Gold entered the trading week with an attractive glint despite fresh optimism sweeping across financial markets.
Risk appetite received a solid boost on Monday after the Food and Drug Administration granted “fast track” status to two coronavirus vaccine candidates. The risk-on mood was also fuelled by the bullish sentiment in China and mounting hopes over a faster than expected economic recovery.
Given how investors across the globe are rushing towards riskier assets at the expense of safe-havens, one would have expected Gold to decline back below the psychological $1800 level. However, it looks like bulls still have enough stamina to push the precious metal towards fresh multiyear highs thanks to a weaker Dollar.
The technical picture remains heavily bullish on the daily charts as there have been consistently higher highs and higher lows. Prices are trading within a bullish channel; the candlesticks are above the 20 Simple Moving average while the MACD has crossed to the upside. For as long as prices remain above the $1800 level, Gold has the potential to test $1815 and a fresh multiyear high at $1825, respectively.
Should $1800 prove to be unreliable support, the precious metal may experience a technical correction back towards the $1780-$1765 regions before bulls gather fresh momentum on risk aversion. It is worth keeping in mind that the fundamental drivers stimulating appetite for Gold remain firmly in place. While price action may send prices lower in the short term, the medium to longer term outlook points north.
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