The US dollar began a strengthening move on Tuesday trading yesterday amid tensions between the United States (US) and China that are heating up after the visit of US representative Nancy Pelosi to Taiwan.
Nancy Pelosi's arrival in Taipei for the highest-level US visit in 25 years is seen by China as a threat to their peace and stability.
This risky market sentiment has prompted a resurgence in the value of the US dollar in the market and has had the effect of falling gold prices from their 4-week highs.
Focusing on the development of the US central bank's monetary policy, San Francisco Federal Reserve (Fed) President Mary Daly and Chicago Fed President Charles Evans stated that they and their friends remain firm and fully united to raise rates to the best level for the economy.
If inflation fails to respond to central bank interest rate hikes, St Louis Fed President James Bullard said they will need to stay "higher for longer".
Pay attention to the price movement on the XAU/USD chart which measures the value of gold against the US dollar during yesterday's trading, the price initially managed to increase to the latest 4-week high of 1788.00 but then it was seen to plunge again.
A significant price drop signaled a change in the bearish trend again and the price reached the 1760.00 zone at the end of the New York trading session.
Also adds to investors' expectations for an indication of a trend change when the price moves back below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart.
There was a surge in prices in the Asian session today (Wednesday) from the 1760.00 zone testing the MA50 barrier level, but the price failed to continue higher in the European trading session.
For expectations of a lower gold price decline, the price will shrink again below the 1760.00 zone, warning investors to be prepared to witness a further severe fall in gold.
A lower drop for the gold commodity is predicted to target the resistance become support (RBS) zone of 1735.00 to be tested before the price heads to the next concentration level at 1720.00.
On the other hand, if the price shows signs of a change in the bullish trend again, the price will jump again to test the high level reached yesterday after passing the 1780.00 level.
If the obstacle is also successfully overcome, the price is expected to continue to rise further up to the target zone of 1800.00 thus recording the latest 4-week high level.
