Gold Bugs Stay Firm With COVID-19 Variants Causing Havoc

Despite the U.S dollar showing signs of stability on Tuesday, gold traded above $1,800 per ounce. COVID-19 may be able to delay the Federal Reserve’s planned asset tapering in the near future.

After losing 0.6% the day before, the dollar, which is normally inversely correlated to gold, began to edge up on Tuesday.

In the US and throughout the world, the COVID-19 variant wreaks havoc on an unsuspecting population. Nevertheless, its impact on the Federal Reserve’s plans may result in a boon for gold bulls. A number of central bank officials are worried about the virus and have delayed the withdrawal of stimulus.

With $120 billion being printed per month, this is likely to continue in full force for the next few months, and some of the funds will be allocated to the yellow metal.

A recent price pattern shows gold is facing resistance at $1,805, which coincides with the previous hourly high and the Bollinger Band 1h-Upper price pattern.

On Monday, the latest American economic data reported a higher-than-expected 5.99 million existing home sales in July. Markit Composite PMI, manufacturing purchasing managers indexes (PMI), and services PMI in August were respectively 61.2, 55.4, and 55.2.

On Thursday, the GDP for the second quarter will be released, and on Friday, the core personal consumption expenditures price index, along with personal income and spending data, will be released.

As can be seen on the hourly chart, the precious metal appears to be trading within the descending channel within the near term. The market sentiment is slightly bearish in the short term.

With gold now below the 100-hour moving average, the price has broken below the 100-hour moving average. The bears will therefore look to extend the current downside move below $1,759 as well as towards $1,771.

Gold bugs, on the other hand, will focus on potential bounces at $1,790 or higher and $1,802 per ounce