Gold Price Forecast: XAU/USD below key ascending channel, downward target at 1,720
|- Gold failed attempt to contain gains above 1,740 culminated in a breakdown under the key ascending channel.
- XAU/USD path of least resistance is downwards based on the negatively inclined technical picture.
Gold lost some ground against the dollar on Friday. Before the retracement, the yellow metal had made a majestic step above the key hurdle at 1,740. Earlier in the week XAU/USD made a run towards 1,750 but stalled at 1,744.84. This might have discouraged the bulls on Friday, poking holes in their confidence in gains past the psychological 1,750.
Meanwhile, XAU/USD closed the week at 1,730.58 (below key ascending channel). Moreover, the retreat slipped under the 50 SMA (1,732.93). This could be a vital zone on Monday because if the seller congestion here is overcome then a return to levels above 1,740 would be highly probable. However, if the price tanks farther down, we can expect the precious metal to explore levels around 1,720, marginally below the 100 SMA at 1,721.
From a technical point of view, the path of least resistance remains to the downside. The RSI, for instance, is glancing downwards below the midline, now at 47.73. The same bearish momentum is emphasized by the MACD. A visible bearish divergence hints that sellers still have the upper hand. It is important that support at 1,720 is defended at all costs, otherwise gold could be on the express lane to June lows at 1,671.
XAU/USD 1-hour chart
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