Gold price has continued to decline and lost more than 1% this week to close below $1,840 as macroeconomic data releases and hawkish comments from Federal Reserve (Fed) officials triggered a rally in the US bond yields and the US Dollar. XAU/USD’s technical outlook suggests that the pair has more room on the downside before an upward correction and next week’s data releases from the US should help investors figure out where the bottom lies for the precious metal.

$1,830 (Fibonacci 38.2% retracement level of the latest uptrend) aligns as a key pivot level for Gold price. In case this level is confirmed as resistance, XAU/USD could extend its slide toward $1,800 (psychological level). Just below that support, the 100-day SMA, the 200-day SMA and the Fibonacci 50% retracement level form strong support area at $1,780/$1,790.

On the upside, the 50-day SMA acts as dynamic resistance at $1,860 ahead of  $1,880 (Fibonacci 23.6% retracement). With a daily close below the latter, XAU/USD is likely to face the interim hurdle at $1,890 (20-day SMA) before aiming for $1,900 (psychological level).

It's also worth noting that the Relative Strength Index (RSI) indicator on the daily chart dropped below 40 for the first time since the beginning of the latest uptrend in early November. This development suggests that Gold price has more room on the downside before it looks for a technical correction.

Traders will also keep an eye on US T-bond yields given the strong inverse correlation with XAU/USD. The 10-year yield stays within a touching distance of the critical 4% level. If the 10-year yield fails to rise above that level and stages a downward correction, that action could translate into a rebound in Gold price. On the other hand, XAU/USD is likely to stay under bearish pressure if that resistance fails.

Gold Bullish on weekly but bearish on lower degree trends

Feb 19 2023