Gold Price Outlook: A Decline Below 1800 Is Still On the Cards

Summary:

Gold price (XAU/USD) could still decline below 1800, as bearish pressure continues to mount on the metal despite today's decline on the greenback.

The US Dollar suffered a sharp reversal late in the New York session, triggering a rally in the XAU/USD pair that took it off intraday lows.

Gold price started the day on the back foot, quickly printing lows at the 1810.66 price level. This move hacked out an intraday violation of the 1821.55 price level, but the decline in the greenback has temporarily halted attempts to initiate a proper breakdown of that price level.

Ahead of President Day’s holiday that will make for a long weekend, the US Dollar index (which mirrors the performance of the US Dollar against a basket of 10 currencies) declined from highs of 90.70 towards the 90.40 price level, thus showcasing the weakness on the greenback.

However, the rally in gold prices is yet to reclaim intraday highs, which could set the stage for a lower close on the XAU/USD for the day. However, the pair is currently up 0.34% this week.

Technical Levels to Watch

The intraday push off the lows still leaves the 1821.55 support vulnerable. If gold price closes below this support on two successive days, the breakdown is deemed complete and we could see a further leg down towards 1800.34. Below this level, additional support comes from 1788.90, with 1762.51 and 1748.40 lining up as potential support targets.

On the flip side, we could see 1850.78 becoming a new upside target if the bulls can resist the breakdown of 1821.55. A break above 1850 also breaks the channel’s upper border, which brings in 1869.39 into the picture. 1881.99 and 1900.76 remain relevant to the price picture as additional targets to the north.