Gold drops further, eyes $1220
- Yellow metal extends slide as US Dollar remains firm.
- A daily close under $1220 would weaken the technical outlook, exposing 2018 lows.
An extension of the US dollar rally across the board pushed gold prices further to the downside. The yellow metal dropped below $1,225/oz and fell to $1,222.45, hitting a 2-day low.
So far, the price has fallen $10 and the short-term technical outlook turned bearish after breaking relevant support levels, including an uptrend line. A break below $1220 could accelerate the decline.
The greenback gained momentum following the European Central Bank meeting and Draghi’s press conference. Also, higher US yields might have contributed to strengthening the rally of the DXY. On Friday, the key report will be growth data from the US (first reading of Q2 GDP).
XAU/USD Levels to watch
To the downside, support levels might be seen at $1220, followed by $1215 and $1211 (Jul 19 low). On the upside, resistance could be located at $1230, $1235 (weekly high) and $1245 (Jun 28 & 29 low).