Gold: Bears to remain in control while below $1928

Gold has been extending its spectacular into Wednesday. The spot caved into the $1900 level and fell over 1% to the intraday low of $1872. The yellow metal is now trading around $1900 and while below $1928 the downside bias remains intact, FXStreet’s Dhwani Mehta reports.

Key quotes

“Gold remains vulnerable, as the US dollar could continue to draw bids amid expectations of decelerating the US Consumer Price Index (CPI), which could raise doubts on the economic prospects once again. Further, the developments around the US-China geopolitics combined with fresh coronavirus updates and sentiment on the global stock markets will hold the key.”

“XAU/USD is teasing a five-month-long rising channel breakdown on the daily chart, with a break below the critical rising trendline support at $1865 to validate the pattern and trigger a fresh sell-off. The next cushion is aligned at the upward-sloping 50-daily Simple Moving Average (DMA) at $1825.35 below which the $1800 mark will be put at risk. The sellers will then aim for the bullish 100-DMA at $1760 should the downside momentum gather steam.”

“The downside appears more compelling, as the daily Relative Strength Index (RSI) points south, having pierced through the midline (50.00).”

“The bears will likely retain control and any pullbacks will be short-lived as long as the price holds below the 21-DMA at $1928. A break above the 21-DMA could prompt the bulls to take on the psychological barrier at $1950.”