Concerns over the risk of a recession have re-supported the strengthening of the US dollar in the market as a safe-haven currency over the weekend after investors scrutinized the release of key economic sector data on Thursday.
In addition to putting pressure on the trading of other major currencies, the gold commodity was also affected when it returned to show depreciation after the US dollar strengthened in the New York session yesterday.
Data readings have shown the manufacturing and services sectors for Europe and the United States (US) contracted with declining figures for June.
With concerns over the growing economic downturn has prompted Federal Reserve (Fed) Chairman Jerome Powell to once again say to bring down inflation by continuing to raise interest rates, in his speech to a panel of the United States House of Representatives (US) on Thursday.
The Fed also spoke of the challenges of securing a safe transition in the U.S. economy following its aggressive move that could also lead to a recession.
On the XAU/USD price chart which measures the value of gold against the US dollar yesterday, saw a surge of gold in the European session after declining hitting around 1824.00 initially in Asian session trading.
However, after the price spike reached a high of around 1845.00, the price of gold began to decline again in the New York session reaching the level of around 1823.00 until the end of the session trading.
Continuing on Friday, the flat price throughout the Asian session began to rise at the beginning of the European session to the level of 1830.00 and also tested the Moving Average 50 (MA50) barrier on the 1 -hour time frame, but still gave indications for bearish movement if the price fails to break the barrier.
If the price continues to decline again, the zone around 1810.00 is seen to return to focus before the lower decline of the price will reach the main support zone at 1800.00 to record the latest 5 -week low.
On the other hand if gold manages to make a rise past 1830.00 and the MA50 barrier, an early signal for a bullish movement of the price will push the rise towards the resistance zone at 1850.00.
The next successful price increase is expected to lead to the target level around 1870.00, which is an important resistance zone that still failed to be broken after being tested in trading in recent weeks.
