As warned by market analysts before, the strengthening of the US dollar in the New York session yesterday has caused a decline in the value of gold assets.
Inflation data from the United States (US) that show inflation readings are still at a worrying level again reinforces expectations for the Federal Reserve (Fed) to continue aggressive interest rate hikes.
Thus, the US dollar has significantly strengthened while embedding almost all markets including stocks, commodities and even crypto.
Gold trading was also affected by the frenzy of the US dollar when the previous pattern of price increases failed to be maintained, witnessing a change in the price direction for the yellow metal.
It can be observed the price movement on the XAU/USD chart which measures the value of gold against the US dollar, the ladder rising pattern displayed a few days ago has ended with a significant plunge in the New York session yesterday.
The price plunged back below the 1720.00 level until retesting the 1700.00 zone at the end of the New York session continuing in today's (Wednesday) trading.
The price has shown signs of a bearish movement for gold after yesterday's decline saw the price move below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart.
The continued lower price drop is expected to test the previous week's support level around 1690.00 for investors to assess whether the price of gold has yet successfully bounced back.
If it crosses that level, the price that continues the further decline will head towards around 1680.00 and record the latest 8-week low.
On the other hand, for the expectation of a price rebound from the 1700.00 zone, the initial price resistance is seen at the 1720.00 level which remains the main focus.
Passing that level and also the MA50 barrier will give an early signal for a change in the bullish trend again before this week's high level will be challenged.
