- Gold witnessed some follow-through selling for the second consecutive session on Friday.
- A strong pickup in the USD demand was seen as a key factor weighing on the commodity.
- The technical set-up supports prospects for a further decline, even below the $1800 mark.
Gold extended this week’s rejection slide from the very important 200-day SMA and witnessed some follow-through selling for the second consecutive session on Friday. The commodity remained depressed through the mid-European session and was last seen trading near multi-day lows, around the $1815 region.
Despite doubts about the US economic recovery, the US dollar was back in demand and was seen as one of the key factors exerting some pressure on the dollar-denominated commodity. However, a softer risk tone extended some support to traditional safe-haven assets and helped limit any further losses for the XAU/USD.
From a technical perspective, the overnight sustained breakthrough 200-hour SMA support, around the $1834-33 region, might have already shifted the near-term bias back in favour of bearish traders. A subsequent slide below the $1825 level supports prospects for a further depreciating move towards the $1800 mark.
The bearish outlook is further reinforced by the fact that technical indicators on the daily chart have been struggling to recover from the negative territory. Hence, a subsequent slide towards monthly lows, around the $1785 region, en-route the $1764 zone, levels tested in November 2020, remains a distinct possibility.
On the flip side, the $1825 region now becomes immediate strong resistance. A sustained move beyond might prompt some short-covering move and push the XAU/USD towards the $1842-44 resistance zone. The next relevant hurdle is pegged near the $1854-55 region (200-DMA), which if cleared will negate any near-term bearish bias.
XAU/USD daily chart
Technical levels to watch
