Gold Price Analysis: XAU/USD slides to fresh six-week lows, around $1875 region
- Gold witnessed some follow-through selling for the third consecutive session on Wednesday.
- Sustained USD buying was seen as a key factor weighing on the dollar-denominated commodity.
- A positive tone around the equity markets further undermined the safe-haven precious metal.
Gold continued losing ground through the early European session and dropped to fresh six-week lows, around the $1875 region in the last hour.
Concerns about the second round of coronavirus infections continued boosting the US dollar's status as the global reserve currency. This, in turn, was seen as one of the key factors that undermined the dollar-denominated commodity and some follow-through weakness for the third consecutive session on Wednesday.
Adding to this, the prevalent positive tone around the equity markets further dented the precious metal's safe-haven status. The downtick also marked the fourth day of a negative move in the previous five and could further be attributed to some technical selling on a sustained weakness below the $1900 horizontal support.
From a technical perspective, the commodity now seems to have confirmed a near-term bearish breakthrough a descending triangle. Hence, some follow-through weakness back towards August monthly swing lows, around the $1863-62 region, now looks a distinct possibility.
Market participants now look forward to the release of the flash version of the US Manufacturing and Services PMI. This, along with the Fed Chair Jerome Powell's second day of the congressional testimony will influence the USD price dynamics and produce some meaningful trading opportunities around the non-yielding yellow metal.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
