Gold investors were shocked by yesterday's price drop! The price of gold dropped to $ 50 in 1 day on Thursday yesterday.
The situation was driven by the strengthening of the US dollar from the beginning of the Asian session yesterday until the New York session.
The strong US retail sales data published in the New York session yesterday was seen to rekindle confidence in expectations for the Federal Reserve (Fed) to tighten policy at the FOMC meeting next week.
On the XAU/USD price chart which measures the value of gold against the US dollar yesterday has seen a price plunge of up to 500 pips!
Initially the price moved slowly below the 1800.00 zone at the beginning of the Asian session yesterday after the price fell back below that level in the previous session. The price is also moving below the Moving Average 50 (MA50) barrier on the 1 hour time frame for the initial signal of bearish movement.
Then the price made a decline until it hit back to the previous focus level at 1745.00 recording a 5 week low.
But the price rose again until trading resumed into the European session today (Friday) testing the resistance at 1765.00 which was also the previous price focus level.
With the drastic price movement, analysts expect the gold price to continue the decline in the lower New York session past the 1745.00 hit yesterday to continue to record the latest lows.
However, investors will also be wary of price changes over the weekend with the usual profit taking activities.
If the price increase is successful, the level that is seen as price resistance is at the 1785.00 zone which has been the price support zone since last week.
A higher rise will return to the price attraction zone of 1800.00 if there are factors that put pressure on the US dollar again and give a return advantage for gold trading.
