- Summary:
- Technicals on gold price suggest that XAUUSD may soon rally. This follows after the US Senate passed the Coronavirus Relief Package. Here are the details.
While volatility on gold price has been limited in the last few trading hours, technicals on XAUUSD suggest that buyers may soon push the market higher. It may have something to do with the massive coroanvirus relief package that the US Senate just passed.
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It can be seen on the 4-hour time frame that gold price has been trading in a tight, downward sloping consolidation since yesterday. Because this follows after a sharp rally, a bullish pennant chart pattern has formed. In forex trading, this is interpreted as a bullish continuation pattern. A break above the high of March 25 at $1,639.14 could mean that XAUUSD is on its way to retest its highs at $1,700.00 where it topped on March 9.
US Senate passes the Coronavirus Relief Package. What’s next?
A delay on the US coronavirus relief package may have dampened the dollar’s strength. Initially, a few US Senators objected to provisions regarding unemployment benefits in the 883-page draft. This caused further revisions until an 880-page, 2 trillion package was finally passed in the Senate. The next step is for the US Congress to vote on the relief package which is scheduled tomorrow. If there are no problems, the final step would be for US President Donald Trump to sign it.
What are the details of the US Coronavirus Relief Package?
- Payments between $1,200 to $2,400 to American taxpayers. Households with children who make less that $198,00 annually are also entitled to $500.
- Unemployed individuals will be provided with a $600 weekly allowance.
- The healthcare system and hospitals will be given $150 billion.
- Small businesses will have access to loans amounting to $360 billion. State governments and hard-hit industries like airlines and cargo also have specified budgets for their own loans.
This news has been widely-anticipated by market participants for a while now. And so, it’s not at all surprising that there is little improvement in market sentiment following this news.
US Jobless Claims today to dictate price action on XAUUSD?
Later today, at 12:30 pm GMT, the unemployment claims report for last week is due. It will show the number of people who filled for jobless claims which is estimated at 1.648 million. A worse-than-expected figure may be bullish for gold price because this would mean that more people have lost jobs. On the other hand, a better-than-expected figure could push XAUUSD lower.
If this happens support at the 200 SMA and 23.6% Fib level (when drawing the Fibonacci retracement tool from the low of March 20 to the high of March 25) might not hold. We could then see a drop in gold price. Near-term support is at $1,546.90. This price has a confluence of support offered by the neckline of a previous double bottom and the 50% Fib level.