The XAU / USD price chart which measures the price of gold against the US dollar yesterday saw a drastic move with the price plunging over 700 pips before making a slow rise until the end of the New York session.
Prices plummeted from the 1954.00 level in the SBR zone (support become resistance) to reach the lowest level of 1882.50. The level is also the lowest in 6 weeks.
Although the decline managed to break through the 1900.00 price support zone, the price closed the New York session trading above that level again. Prices remain below the 1920.00 level in the Asian session this morning before showing signs of continuing lower lows.
The main factor driving the decline in the price of gold is due to the significant strengthening of the US dollar in the market, surpassing almost all other major currencies.
This is due to the increasing demand for the US dollar following the second wave of the Coronavirus pandemic in Europe. The significant strengthening of the US dollar has also drowned out gold as a safe-haven asset.
The decline in the European session was seen testing the 1900.00 level to resume lower lows.
The next downtrend is expected to go to the support zone at 1870.00 which was tested in trading last August.
However, if the price jumps again, the level of 1938.00 in the SBR zone (support becomes resistance) will be the focus.
