Gold Price Analysis: XAU/USD risks freefall to $1,700 area
|- Gold is likely to open trading on Monday in losses, especially if the critical ascending channel’s middle boundary support breaks.
- The MACD has reinforced XAU/USD’s bearish outlook on the daily chart.
- Recovery will come into the picture if gold closes the day above the middle boundary support.
Gold has continued to struggle amid a stronger US dollar. The precious metal has generally sustained a downtrend within an ascending parallel channel since August 2020, top at $2,075 per ounce. Meanwhile, losses are likely to take precedence if a crucial support area gives in to the intensifying selling pressure.
XAU/USD closed the week’s trading at $1,821 amid a growing bearish grip. The world’s most expensive metal is also holding at the ascending parallel channel’s middle boundary. If this support caves in, massive selling orders would be triggered, as gold explores downhill price levels.
On the downside, the most formidable support is the region at $1,750, but XAU/USD losses are expected to extend to the channel’s lower boundary around $1,700.
The pessimistic outlook has been validated by the Moving Average Convergence Divergence (MACD) on the daily chart. Its position under the midline suggests that sellers have more influence, at least for now.
XAU/USD 4-hour chart
Recovery is possible as long as the support at the middle boundary is defended. Moreover, traders should avoid expected delays at $1,850, as highlighted by the 50 Simple Moving Average (SMA) on the daily chart and the 200 SMA.
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