Trading in gold assets continued to fall on Wednesday after the pattern of price movements displayed in the past few weeks remained gloomy.
Investors are also not pinning high hopes on seeing the yellow metal commodity surge in the near term while the market remains alert to the risk of a change in sentiment ahead of the corporate earnings reporting season.
Examining the price movement on the XAU/USD chart which measures the value of gold against the US dollar, there was a bullish pattern at the beginning of the week before starting to display a horizontal movement on Tuesday yesterday around 1650.00.
After the price moved back below the Moving Average 50 (MA50) resistance level on the chart's 1-hour time frame, investors began to acquiesce to the bearish signal.
As expected, the price that resumed trading today (Wednesday) was seen to display a downward pattern starting from the Asian session until continuing into the early European session following the US dollar currency which regained momentum to slightly strengthen again supported by the continuous increase in the yield of the United States (US) treasury ).
The drop in price is seen once again testing the support level of 1640.00 which is in the RBS zone (resistance becomes support) with investors evaluating the indication of further gold movement.
If it breaks through lower than the RBS zone, the price is expected to continue its decline towards the 1615.00 concentration zone, which is a 2-year record low for gold after it was hit at the end of last September.
On the other hand, if the price bounces from the 1640.00 zone and the rise also breaks through the MA50 barrier, the chance for the price of gold to rise higher is brighter.
The price increase is expected to return to the resistance zone at 1680.00 which has been a barrier to the price increase last week.
Passing the zone will push gold's bullish trend towards the 1700.00 concentration zone before going to the higher resistance zone around 1720.00.
