Gold Price Analysis: XAU/USD’s reversal extends to $1,900 area
- Gold gives away previous gains and dives $30 lo test $1,900 area
- Risk aversion boosts the dollar as US stimulus hopes fade
- XAU/USD is testing the bottom of a triangle formation, at $1,895
Gold’s upside attempt witnessed on Wednesday has been short-lived as the precious metal was unable to extend gains beyond $1.930 area. XAU/USD has given away gains on Thursday, with US dollar demand picking up amid a sourer market sentiment and upbeat US macroeconomic figures.
XAU/USD dives as market sentiment deteriorates
Bullion prices have fallen nearly $30 so far on Thursday amid a more negative risk sentiment. Hopes of a fiscal stimulus deal in the US have been crushed by US President Trump's comments accusing the Democrats on Twitter of not willing to do “what is right for our great American workers, or our wonderful USA itself on Stimulus”. This has triggered a rush for safety that has boosted the US dollar.
Furthermore, on the macroeconomic front, the better than expected US Weekly Jobless Claims, which dropped to 787K against market expectations of 860K have contributed to strengthening the US dollar in detriment of Gold futures.
Gold testing the bottom of a triangle formation
The daily chart shows XAU/USD testing the bottom line of a symmetrical triangle, now around $1,890. Below here, bulls might take over and push gold towards $1,875 (100-day SMA) and late September lows at $1,848 before treading into multi-month lows.
On the upside, the pair should break above $1925/30 (50-day SMA and the top pf the triangle) to regain bullish momentum and extend towards $1,975 (September 16 high) and $1995 (September 1 high).
XAU/USD daily chart
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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.
