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XAU/USD Outlook: Pullback from New 7-Year High So Far Limited as Strong Fears of Coronavirus Pandemic Persist

Spot gold price dipped on Tuesday after steep, week-long rally hit new 7-year high but showed initial signs of stall on Monday’s daily candle with very long upper shadow, formed after strong upside rejection on approach to psychological $1700 barrier.

Pullback faced headwinds from pivotal support at $1635 (Fibo 38.2% $1547/$1689 upleg/rising 5DMA) and bounced to $1655 zone, despite south-turned daily indicators (bullish momentum is fading; stochastic emerged from overbought territory and overbought RSI reversed).

Holding above $1635 would keep larger bulls intact and near-term focus at immediate targets at $1689/$1700 as traders remain very cautious and ready for fresh safe-haven buying on fears of coronavirus pandemic.

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Clear break of $1635 pivot, on the other side, would generate initial reversal signal and open way for deeper correction towards next significant supports at $1618/11 and $1600 in extension.

Res: 1663; 1685; 1689; 1700
Sup: 1649; 1635; 1618; 1611