Gold prices have experienced a fresh decline after failing to break above the resistance level of $2,060. This decline has been triggered by a strengthening US Dollar and a bearish trend in the EUR/USD pair. As a result, gold has traded below key support levels, suggesting the possibility of further downsides in the near term.
The 4-hour chart of XAU/USD highlights the downward movement in gold prices. The price has dropped below the $2,030 level, the 100 Simple Moving Average (red, 4 hours), and the 200 Simple Moving Average (green, 4 hours). Additionally, a key bullish trend line with support at $2,025 has been breached, indicating a higher likelihood of more downsides.
The current price action in gold suggests that it may continue to decline below the $2,010 level. The initial support level is expected to be near $2,007, followed by a major support level at $2,000. If the downward trend persists, gold prices could potentially reach the $1,975 level in the coming days.
On the upside, gold faces hurdles near the $2,030 level and the 100 Simple Moving Average (red, 4 hours). If the price breaks above these resistance levels, it could soar towards the $2,050 resistance. Further bullish momentum could lead to a test of the $2,060 level, and if successfully breached, gold prices might rally towards $2,078.
The bearish trend in the EUR/USD pair has contributed to the decline in gold prices. The pair is currently trading below the resistance level of 1.0830, indicating the potential for more losses in the near future. As the US Dollar strengthens, gold becomes relatively less attractive as an investment, leading to a decline in its price.
The US Consumer Price Index (CPI) is expected to decline to 2.9% in January 2023 (YoY). This could further strengthen the US Dollar and add downward pressure to gold prices. Investors should closely monitor the CPI release and its impact on the currency market, as it is likely to influence the direction of gold prices in the coming weeks.
Gold prices have started a fresh decline, triggered by the failure to break above the $2,060 resistance level. The technical analysis indicates the possibility of further downsides, with initial support at $2,007 and major support at $2,000. The upside potential remains limited, with resistance levels at $2,030 and $2,050. The decline in gold prices is also influenced by the bearish trend in the EUR/USD pair, which indicates the potential for more losses. Traders should closely monitor the US Consumer Price Index for further insights into the direction of gold prices.
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