Following the recent volatility caused by the coronavirus pandemic, Gold (XAU/USD) has benefited and its prices have been increasing. However, the price of the precious metals seems to be static as it struggles to match gains and lows experienced earlier this month.
Central banks introduce measures to ease the impact of coronavirus
As the pandemic continues to affect the economy investors will be looking for ways to cut their losses and thus might trigger demand which might push gold to a new high of $1705. The gains experienced in recent times may continue even as the yellow metal faces various fiscal and monetary measures implemented by various governments to combat the spread of COVID-19.
Various central banks have proposed measures aimed at helping the economy and this will boost investor confidence. For instance, the Federal Reserve has prepared a “Main Street Business Lending Program” that aims at supporting lending to small businesses. These kinds of measures are supposed to shore up investor confidence which is an indication that a rebound is possible after the containment of COVID-19.
Nevertheless, it is likely that the Federal Open Market Committee will implement more measures to support the economy. Jerome Powell the Chairman stressed that the Fed is ready to use a series of tools to support businesses and household thus keeping the economy strong.
Gold poised for a rebound
The outlook of gold might be boosted by the low benchmark rates as investors seek alternative fiat currencies. Gold is still in a strong position at the current resistance level of $1674.75 and a support level of $1625.14. Currently, the yellow metal is showing similar signs exhibited last month when the price rebounded.
The precious metal ended 2019 on a high at $1,557 and began 2020 strongly with RSI forcing it into overbought territory over that period. In February a similar trend was witnessed whereby the price of gold marked a monthly low of $1548 with RSI coming out of bearish formation