Gold Price
Gold price action on the XAU/USD saw the yellow metal breaking below the bearish flag and finding support on Wednesday at the critical $1800 psychological support. This area is also the site of the dynamic support provided by the 200-day moving average.
Risky sentiment swept through the global financial markets yesterday on positive coronavirus expectations as well as President Trump’s approval for the General Services Administration to provide funding and human resources to the campaign team of the presumed winner of the US presidential election, Joe Biden. The markets have interpreted this as a sign of progress towards a smooth transition, even though legal challenges persist.
The markets will now turn their attention towards Wednesday’s FOMC minutes as well as other US data to determine short term direction for gold price.
Tuesday’s daily candle terminated at the 1800.4 psychological support and completed the measured move from the breakdown of the bearish flag pattern on the XAUUSD daily chart. This has allowed for a slight pullback to the upside this Wednesday, as sellers start to bank profits from the breakdown move.
The technical setup and the market fundamentals continue to back gold sellers. Therefore, any upside retracements may constitute opportunities to sell on rallies. Rally points may target 1821.55 as the initial destination, followed by 1850.78 and 1869.39. Only a break above 1900.76 may change the sentiment.
On the other hand, resumption of selling pressure would probably challenge the 1800 psychological support. This level has to give way for a resumption of the downtrend towards 1788.90 and possibly 1762.51.
