XAU/USD outlook: Limited correction likely to precede fresh weakness
|XAU/USD
Gold price is holding within a narrow consolidation for the second consecutive day after falling by 4.4% last Thu/Fri.
Limited upticks suggest that strong downside pressure persists, keeping in play risk of deeper correction of larger $1614/$1959 rally.
Recent stronger than expected US labor data added to expectations that the Fed will remain hawkish, with comments from US policymakers signaling that the central bank continue to raise interest rates to at least 5.4%, to bring high inflation under control.
I addition, tight labor market signals that further rise of borrowing cost may not be so harmful for economic growth and diminish the risk that the economy will fall into recession.
Oversold conditions on daily chart warn of prolonged consolidation, with near-term action so far being unable to sustain break above weekly cloud top ($1875) which reverted to initial support and extended upticks expected to stay under broken psychological $1900 level.
This could keep near-term bias with bears and offer better selling opportunities for push towards targets at $1839/27 (55DMA / Fibo 38.2% of $1614/$1959).
Res: 1881; 1891; 1900; 1909
Sup: 1860; 1839; 1827; 1806
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