Is the price of gold making a price correction or an early indication for a more severe fall after this?
Market risk sentiment driven by the resurgence of Covid-19 is seen to support the movement of the US dollar as investors are likely to choose to have cash holdings for emergencies making the attraction to gold a bit faded.
On the XAU/USD price chart which measures the value of gold against the US dollar, saw a re -decline in the price of gold at the end of last week after the previous rise had hit the latest 4 -week high reaching around 1834.00.
Being an early indication for a bearish trend again, the price has already moved below the Moving Average 50 (MA50) barrier level on the 1 -hour time frame.
After closing last weekend’s trade around 1810.00, the price resumed trading earlier this week to a lower level heading to the 1800.00 level again.
The 1800.00 level which is in the RBS zone (resistance become support) will provide important clues for the direction of gold prices next week.
Expectations of lower price declines will occur if prices fall below that zone. The price will return to the previous focus levels around 1765.00 and 1745.00.
On the other hand, if the decline is made only a price correction and the 1800.00 zone returns to support the rise again, the price will test once again the high level reached last week.
For a successful bullish trend to continue will push the expected rise towards the SBR zone (support become resistance) at 1850.00.
