The magnitude of coronavirus impact on the U.S. economy is hard to predict, though the market is expecting a 4.0% contraction in the first quarter. Bullish gold investors would be hoping to see a sharper decline in growth and a downbeat tone from the Fed.
From a technical point of view, there are potential signs of a rebound in spot gold price as shown on the 1-hour chart. It has broken above a bearish channel drawn from April 24, after forming a double-bottom near $1,692, which is also a 38.2% Fibonacci retracement of the rally began on April 21. Bullish investors might consider $1,700 as the nearest intraday support, with potential rebound targets at $1,721 and $1,730. In an alternative scenario, a break below $1,700 would be a warning that $1,692 may be threatened again.
Source: TradingView, GAIN Capital