The gold price is declining on the strength of the greenback and the spot price has fallen below $1,700 again. Bullion is challenging the strong bullish trendline of the last two weeks (see attached chart) and whether the price holds above this significant support or falls through it will be crucial in determining if gold will rebound or if we are close to a break down. Investors are celebrating, perhaps a little too early, the apparent effectiveness of the Gilead drug in treating coronavirus and speeding up patients’ recovery from it. In this scenario, they are seeing less need to increase the percentage of gold in their portfolio and are moving back to some more risk-on assets.
Oil remains in a bearish phase with the WTI price falling to a 18-year low. The spread between WTI and Brent is also widening with Brent proving to be much more resilient currently. This is a clear indicator of how much this oil crisis directly affects the United States and their producers, with the shale oil sector likely to be one of the casualties from the huge oversupply.
