- Gold extended the previous day’s rejection slide from the $1875-76 supply zone.
- Break below two-week-old ascending trend-line sets the stage for further decline.
- The metal now seems vulnerable to slide below the $1830 intermediate support.
Gold continued losing ground through the mid-European session and dropped to three-day lows, around the $1840-39 region in the last hour.
Against the backdrop of the upbeat market mood, a sudden pick up in the US dollar demand exerted some additional downward pressure on the dollar-denominated commodity. The latest leg down dragged the XAU/USD below a two-week-old ascending trend-line support.
Given the overnight failure near the $1875-76 barrier, the breakdown might have already set the stage for further weakness. The negative outlook is reinforced by the fact that oscillators on 4-hourly/daily charts have just started drifting into the bearish territory.
Hence, a subsequent slide towards intermediate support, around the $1830 horizontal zone, looks a distinct possibility. The downward trajectory could further get extended back towards challenging January monthly swing lows, around the $1800 round-figure mark.
On the flip side, the $1857-60 region now act as immediate resistance. Any further positive move might continue to meet with some fresh supply and remain capped near the $1875-76 supply zone. Only a sustained breakthrough will negate the near-term bearish bias.
The XAU/USD might then aim to reclaim the $1900 mark and appreciate towards the $1922-24 resistance zone. Some follow-through buying has the potential to lift the commodity further towards the next major hurdle near the $1960 region.
XAU/USD 4-hourly chart
Technical levels to watch
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