If there were any product that one would expect to experience an upswing during this uncertain time of COVID-19, economic troubles, and social unrest, it would be the traditional safe haven of Gold. But the yellow metal has been languishing ever since its 23% rally from late March to April, bouncing back and forth in a range between 1680 and 1765. As equity index futures continue to climb as risk-on sentiment deepens, gold futures slipped below the 1700 level on Friday to again test the lower end of the range.
Technical traders likely noticed that the /GC contract also has now fallen below its yearly Linear Regression line near 1706, but rebounded to hold the 64-day EMA near 1687 on Friday and has bounced a bit since then. Another thing to consider is that we have seen relatively light volume during the past few months, and all the heavy volume days that exceeded the 50-day SMA during May (including Wednesday and Friday last week) have been on red candles. Gold traders should keep an eye on Wednesday’s Fed meeting and continue to watch the 64-day EMA for support on the downside.
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