Gold trades back above $1,700 after a poor start in the earlier today
Gold traded more tepidly to start the day, falling back under $1,700 before recovering some ground to retrace higher and back above the 100-hour MA (red line).
However, buyers are still finding it tough to gather enough momentum to move back above the 200-hour MA (blue line) now @ $1,708.59.
As such, the near-term bias in gold now remains more neutral.
So, despite the move higher in the past few hours, buyers have more work to do if they are to go in search for any topside break in gold. Beyond the 200-hour MA, further resistance is then seen around the region of $1,713-15 before the 30 April high @ $1,721.68.
For now, gold has pretty clear downside levels defined by support at around $1,671-72 with the 21 April low @ $1,659.55 also a key level to watch.
Meanwhile, the long-term fundamentals suggest that gold has pretty sizable upside - BofA suggests $3,000 - but that doesn't mean that the commodity isn't susceptible to short-term volatility as we are still in the eye of the coronavirus storm.
The technical levels will do well to guide us during this period and in terms of near-term price action, it is telling us that gold bias remains undecided for the time being.
Key upside targets remain closer to $1,739 and the year's high at $1,747.36. A firm break beyond those levels could see gold prices start running towards $1,800 on the right fundamentals i.e. no liquidation trades at play.
But as we are still caught in the eye of the coronavirus storm, caution is needed as market sentiment can quickly shift from day-to-day. For now, it looks like gold may be starting to adopt a bit more of a consolidation mood in the coming sessions.
The downside levels highlighted above will be ones to watch for in case things go awry but I would still argue that gold remains a buy-on-dips play on any significant fall/retracement.
