Gold: Pullback stalls near key Fib support
- Gold is attempting a bounce, having defended key Fibonacci level on Tuesday.
- Risk reset in equities indicates the path of least resistance for gold is to the downside.
Gold is currently trading at $1,556 per Oz, representing a 0.22% gain on the day.
The yellow metal turned lower from $1,594 on Monday and almost tested $1,548 - the 38.2% Fibonacci retracement of the rally from $1,446 to $1,611 - on Tuesday, as investors put a bid under risk assets.
US stocks finished sharply higher Tuesday with Dow Jones Industrial Average rising 1.4% to finish at 28,807. The Nasdaq Composite Index advanced 194.57 points or 2.1%, to close at a record 9,467.97, surpassing the previous record closing of Jan. 23. The S&P 500 also gained more than 1.5%.
Notably, all three indices recovered Friday's coronavirus-led losses.
The risk-on has also hit the Asian shores. At press time, the Shanghai Composite index is adding 1.6% and Japan's Nikkei is reporting a 1.7% gain. It appears the investors are convinced that coronavirus would not lead to the prolonged slowdown in the global economy.
Even so, gold is attempting a bounce in Asia, possibly due to oversold hourly chart relative strength index. However, the daily chart indicators are signaling a strengthening of bearish momentum.
As a result, gains seen at press time could be short-lived, more so, as the dollar index, gold's biggest nemesis, is flashing green for the third straight day. Currently, the index is seen at 98.02, having bottomed out at 97.35 on Jan. 31.