Gold Price Analysis: Drops 1%, bearish RSI divergence on 1H chart

• Gold drops alongside losses in the US stock futures. 
• The number of coronavirus cases surges in China. 
• Gold’s hourly chart suggests scope for a deeper price pullback.

Gold is flashing red on Monday despite the renewed coronavirus concerns and signs of risk-off in the US stock futures.

The yellow metal is trading at $1,682 per ounce, representing a 1% drop on the day, having faced rejection at $1,690 during the early Asian trading hours. 

China reported 99 new coronavirus cases on Saturday, the highest in recent weeks, according to The Economic Times. Further, the number of new cases rose to 108 on Sunday, taking the nationwide tally to 82,160, according to William Yang, East Asia correspondent for DW. 

The surge in new cases seems to be weighing over the S&P 500 futures, which are currently down 1.7%. 

Gold, a classic haven asset, could continue to ignore the risk-off in the US index futures, as the yellow metal’s hourly chart is reporting a bearish divergence of the relative strength index, which occurs when the indicator prints lower highs as opposed to higher highs. 

The bearish divergence is widely considered an early sign of bearish reversal and would gain credence if the immediate horizontal support at $1,678 is breached. That would expose the 50-hour average, currently at $1,660. 

On the higher side, a convincing move above $1,690 would revive the immediate bullish setup. 

Hourly chart

Trend: Bearish 

Technical levels