- Gold targets $1800 following a breach of the critical $1850 level.
- Vaccine progress, Biden transition boost risk, weigh on gold.
- US CB Consumer Confidence data, vaccine updates in focus.
Gold (XAU/USD) resumed last week’s bearish momentum on Monday and fell 2% to the lowest levels in four months at $1831. Gold faced a double whammy amid a surge in the US dollar’s demand, in response to strong US business activity data, on one hand. While on the other hand, hopes of a quicker economic rebound on coronavirus vaccine progress drove investors towards riskier assets, which weighed on the yieldless gold. Reduced need for additional monetary and fiscal stimulus, as upbeat US data eased economic growth concerns, added to the downside on gold.
Looking ahead, the bright metal remains exposed to further downside risks, in the wake of the global market optimism amid vaccine progress and Biden transition process. The risk-on rally in the stocks could dash hopes of any recovery in gold, as markets will closely eye the US CB Consumer Confidence data due for release later in the NA session.
Gold: Hourly price chart
The path of least resistance for gold remains to the downside, as depicted by the hourly chart.
The price has charted a bear pennant breakout on the given timeframe, calling for a test of the measured target at $1800.
Since the hourly Relative Strength Index (RSI) trends in the oversold territory, a dead cat bounce cannot be ruled out towards the pattern support now resistance at $1836.
The next resistance is seen at the bearish 21-hourly moving average (HMA) at $1842. The long-held support at $1850 could then act as a strong resistance if the bulls extend the recovery momentum.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.