Talks for a measure to reduce asset purchases (tapering) by the Federal Reserve (Fed) again boosted the value of the US dollar in the market.
However, the situation of the strengthening of the US dollar was not favored by gold investors when the gains made on the appreciation of gold did not last long.
On the XAU/USD price chart which measures the value of gold against the US dollar saw the price jump from the 1810.00 zone to test the resistance zone at 1830.00 which was also the focus last week.
The rise was initially driven by the depreciation of the US dollar after the ADP NFP employment data report for the US private sector posted a dismal reading.
However, hawkish statements by Fed members regarding policy tightening measures at yesterday's New York session came as a shock to the market.
The re -strengthening US dollar has again pushed the price of gold to decline to the 1810.00 price zone with a plunge of around 250 pips.
The 1810.00 price zone however remained a support level restraining the price from falling lower before the price returned to flat around it continuing on Thursday’s trading.
Investors are wary of the movement of the US dollar which is expected to continue strengthening while waiting for the US NFP employment data report to be published on Friday.
Further strengthening of the US dollar will push the price to test the 1800.00 focus zone and the price reaction in that zone will provide important clues for investors to see the direction of the next gold price movement.
If the price continues to decline lower below the 1800.00 zone, the expectation of a lower decline may return to hit the 1765.00 and 1745.00 levels that were the previous focus.
However, if the price of gold returns to give hope to investors to rebound, the 1830.00 resistance zone will once again be tested.
Breaking the resistance will push the price increase to continue towards the SBR zone (support become resistance) at 1850.00.
