Gold Price Analysis: XAU/USD attempting to bounce up from $1,775 low

Gold futures accelerated heir downtrend from last week highs near $1,900, breaking below the 200-day SMA, at $1,800 area, to hit its lowest prices in nearly five months, at $1,775. Bullion prices are attempting to regain lost ground on the late US session although they still remain well below the key $1,800 support area.

Gold prices suffer on a risk-on market

Investor’s optimism about the promising results of the diverse COVID-19 vaccines and the positive sentiment about Joe Biden confirmed his victory in the US elections have offset concerns about the grim economic outlook for this and, possibly also the next quarter.

The market seems to be focusing on happier spring and summer times, which is boosting equities higher in detriment of safe-havens as gold. The XAU/USD is on track to close its worst week in two months, with a 4.5% decline as of writing, and accumulating an 8.5% drop on the last three weeks.

XAU/USD: Breach of $1,800 will increase bearish momentum

From a technical point of view, the bearish confirmation below the 200-day Moving average, at $1,800 would increase negative traction. On the way south next areas of interest are $1,760, the 50% Fibonacci Retracement of the March – July rally and $1,700 (June 15 lows).

With technical indicators on the daily chart already into oversold levels, the XAU/USD might bounce up before dropping further. On the upside, above the mentioned $1,800, the pair should break $1,815 (November 25 high) and extend beyond $1,850 to shrug off downside pressure and open the path towards $1,900 and $1,910 psychological level and 100-day SMA.

Technical levels to watch