- Gold price has plunged below the critical support of $1,836.00 firmly.
- Investors have shifted the spotlight on Fed Powell’s testimony.
- The market participants should brace for underperformance from the US PMI.
Gold price (XAU/USD) has witnessed a steep fall after failing to sustain above the critical hurdle of $1,840.00 in the early European session. The precious metal is hovering around the cushion of $1,835.00 and an extension of a downside move looks possible as uncertainty ahead of the Federal Reserve (Fed) chair Jerome Powell’s testimony cannot be ruled out.
The US dollar index (DXY) has displayed a modest rebound after re-testing Monday’s low at 104.23. A sideways move is expected from the DXY as investors are awaiting Fed’s testimony to take informed decisions. Apart from Fed’s testimony, US Purchase Managers Index (PMI) will remain in focus, which is due on Thursday.
The Composite PMI is seen higher marginally to 53.5 from the prior print of 53.4. While the Manufacturing and Services PMIs are indicating a severe underperformance. The Services PMI is seen significantly lower at 49.1 against the prior print of 53.2. Also, the Manufacturing PMI is expected to shift lower to 54.7 from the former figure of 55.7.
Gold technical analysis
The gold prices have given a downside break of the Descending Triangle whose horizontal support is placed from $1,836.04 while the downward sloping trendline is plotted from Monday’s high at $1,845.54. The primary trendline placed from last week’s high at $1,857.58 has acted as a major barricade for the gold bulls.
Gold bulls witnessed a steep fall after failing to defend the 50-period Exponential Moving Average (EMA) at $1,838.26. Meanwhile, the Relative Strength Index (RSI) has slipped into the bearish range of 20.00-40.00, which signals more downside ahead.
Gold intraday chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats below 1.0700 as USD rebounds
EUR/USD lost its traction and retreated slightly below 1.0700 in the American session, erasing its daily gains in the process. Following a bearish opening, the US Dollar holds its ground and limits the pair's upside ahead of the Fed policy meeting later this week.
USD/JPY recovers toward 157.00 following suspected intervention
USD/JPY recovers ground and trades above 156.50 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, the Federal Reserve's policy decisions and US employment data could trigger the next big action.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.