The price of gold has advanced from $1848 above $1915 this trading week and the current price stands around $1898. Concerns about sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets.
Fundamental analysis: Risk aversion will likely prevail at the beginning of the week
Gold has continued to trade in an uptrend and investors trading gold are expected to be more active in the upcoming days. The US stock market is pressured by the news that US President Donald Trump has contracted COVID-19 and data showing a slowdown in recovery in the battered US labor market.
According to the official release, the US added 661K new jobs in September, much worse than the 850K expected. Risk aversion will likely prevail at the beginning of the week which is positive for the price of gold.
Gold is considered a safe-haven asset and the price of gold has advanced in the wake of the coronavirus crisis as investors look for safer places to invest their money. According to some analysts, gold is overbought currently and popular sentiment around this precious metal has grown greedy and euphoric.
Despite this, the scenario for the price of gold could be even better as the “dovish” Fed decision continued to pressure the US dollar. The price of gold is also supported by the news that the House of Representatives passed a $2.2 trillion coronavirus relief bill on a party-line vote.
Former Goldman Sachs CEO Lloyd Blankfein also said that the US dollar will lose its value further and the price of gold will strengthen even more. The price of gold may be ready to advance higher in October as Federal Reserve announced that will keep interest rates lower for longer to support the economic recovery.
Technical analysis: The price of gold is very close to the current resistance level
This precious metal has advanced this trading week and the current price stands around $1898.
When we take a look at the chart above ( one year period), we can see that the price of this precious metal has advanced from $1 445 to $2 075 and after that started to fall. The current resistance levels are $1 900, $2 000 and $2 100, $1 850 and $1 800 represent the current support levels.
If the price jumps above $2 000 it would be a signal to buy gold and we have the open way to $2 100. Rising above $2 100 supports the continuation of the bullish trend and the next price target could be located around $2 300.
On the other side, if the price falls below $ 1800 it would be a strong “sell” signal and we have the open way to $1 700.
The price of gold is supported by uncertainty over the global economic future and safe-haven assets typically perform well during downturns and financial crises. Risk aversion will likely prevail at the beginning of the week which is positive for the price of gold. Gold is overbought currently but as long the price of gold is above $1 800 this precious metal is in the “buy” zone. If the price jumps above $2 000 that would be a confirmation of the “bullish” trend and open way to $2 050 or even $2 100.