Gold Price Analysis: Attempts recovery above $1700 after the $25 slide

Gold prices (XAU/USD) has bounced off four-day lows of $1692.04 and looks to extend the recovery momentum above the 1700 mark, despite a broadly firmer US dollar.

The yellow metal seems to benefit from a cautious start to the European markets, as looming concerns over the global economic damage from the coronavirus pandemic overshadow the optimism around the potential easing of the lockdown measures in some of the major economies.

Meanwhile, the USD bulls appear to take a breather in the early dealing, as the greenback consolidates the latest move higher against its six major peers. A typical pre-FOMC caution trading seems to pause the steady recovery in the buck. The FOMC begins its two-day monetary policy meeting later today.  

Gold fell sharply by over 1% or nearly $25 from 1716 in Asia after the renewed tensions between the US and China over Beijing’s delayed response to tackle the coronavirus crisis dampened the market mood and lifted US dollar higher across the board.

Also, the oil-price slump aggravated the global deflationary fears and added to the downside in the inflation-hedge gold. Attention now turns towards the US CB Consumer Confidence data for a fresh trading impetus.

At the press time, gold trades at 1702.55, still down 0.68% on the day. The bias bearish will remain so long as the spot remains below the 5-DMA at 1718.23. Should the rebound fizzle out, the next support awaits at the upward sloping 21-DMA, now at 1675.70.

Gold additional technical levels to watch