Gold Price Analysis: XAU/USD ticks up to $1,860 after testing $1,850 support
- XAU/USD extends losses for the fourth day in a row to test $1,850 support.
- Gold weakens on risk aversion as COVID-19 cases remain on the rise.
- Breach of $1,850 might accelerate gold's near-time downtrend.
Gold futures have headed south for the fourth consecutive day on Thursday, to test key support at $1,850, which, so far, remains intact as the pair bounced up to $1,860 area.
XAU/USD extends losses on a risk-off market
The unremitting growth of the second COVID-19 wave has returned to the spotlight after the US reported a death toll of 250,000 on Wednesday and New York City decided to close schools to curb the increase of contagions.
This news has offset investors’ optimism about the promising trial results of some coronavirus vaccines, reactivating concerns about the economic consequences of further lockdown measures and dampening the moderate risk appetite seen over the previous days.
The US dollar has been the biggest winner in this scenario, picking up against its main rivals after a six-day decline. Gold prices have given in against a firmer greenback, extending their reversal from last week’s high of $1,900 to test the bottom of the last four months trading range at the mentioned $1,850 level.
Gold might accelerate its downtrend below $1,850 support
XAU/USD has honoured $,1,850 support area and, so far, remains trading rangebound within the mentioned level and $1,900 on the upside. A bearish breakout below $1,850 (later-September lows) would increase bearish pressure and might drive the pair towards $1,795 (mid-July lows) and finally $1,760, the 50% Fibonacci Retracement of the March – July rally.
In contrast, the pair should break above $1,900 and $1,910 psychological level and the confluence of the 50 and 100-day SMAS to ease bearish momentum and return towards $1,960 (intra-day high) and $1,995 (September 1 high).
Technical levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
