Gold: Technical set up points to the additional downside in the near-term
|Gold (XAU/USD) has started out a critical week on a cautious note, ranging within a striking distance of the two-month lows of $1849, as the yellow metal’s bearish bias remains intact ahead of a big week, FXStreet’s Dhwani Mehta reports.
Key quotes
“The Asian market mood remains buoyed by the renewed optimism on the Chinese economic recovery after industrial profits in the world’s second-largest economy rose for the fourth straight month. Further, uncertainty over the US political scenario, with the election debate in focus this week, and the pre-Nonfarm Payrolls release anxiety keep the dollar bulls unnerved.”
“Amid a light data docket in the day ahead, the risk sentiment and US dollar dynamics will continue to play out, in the face of the looming coronavirus risks and US fiscal stimulus uncertainty.”
“Gold is challenging the critical barrier at $1863 on the road to recovery. That level is the confluence of the 21 and 50-hourly Simple Moving Averages (HMA). Although the bulls are likely to have little luck in their attempt, as the short-term averages have charted a bearish crossover. The 21-HMA is cutting the 50-HMA from above, suggesting the recovery attempts are likely to fade out, opening doors for fresh declines.”
“To the downside, the two-month lows of $1849 will be threatened, below which the powerful 100-day Simple Moving Average (DMA) at $1847 will be on the sellers’ radar. All in all, the path of least resistance is to the downside.”
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