Gold Price Analysis: XAU/USD eyes 38.2% Fib retracement support
Gold looks set to extend its recent decline to $1,836 – the 38.2% Fibonacci retracement of March to August rally – as crucial technical indicators have rolled over in favor of the bears. The weekly chart MACD histogram, an indicator used to gauge trend strength and trend changes, is now printing a deeper bar below the zero line, a sign of the strengthening of the downward momentum. The 5- and 10-week simple moving averages have produced a negative crossover. Further, last week's bearish marubozu candle shows bearish sentiment is quite strong.
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With the dollar still in demand the path of least resistance for gold and silver may be lower, but the downside for both is limited from here. A lot of position length has come off the market, and this reduction may leave both metals a little more stable, as they no longer look anywhere near as over overextended as they did even a week ago.
Risk-off sentiment favors the USD and USD assets, such as treasuries, but the yield on the US 10-year is down to 0.65%. Lower US nominal yields should eventually begin to kick favorable for bullion given past correlations.
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