Gold trades with a sour tone on Monday, with XAU/USD hovering around $1,990 a troy ounce after falling to $1,981.16 at the beginning of the American session. The US Dollar kick-started the week with a firm footing, extending its Friday rally amid mounting risk-aversion. The Greenback pared its advance during European trading hours, but its back up amid a persistent dismal mood that keeps US stock indexes in the red.

Market concerns rotated around economic growth and increased chances the United States Federal Reserve (Fed) could decide to extend the tightening cycle beyond May. US data released last week came in weaker than anticipated and fueled concerns about a possible recession before year-end. Furthermore, a couple of Fed officials were on the wires with hawkish words that suggest the central bank may not be done yet.

Rising US Treasury yields provided additional support to the US Dollar. The 10-year Treasury note yields 3.59%, up 7 basis points (bps) on the day, while the 2-year note offers 4.20%, up 10 bps.

The daily chart for XAU/USD shows that the risk of a continued slide increased. The pair is currently struggling to hold above a now flat 20 Simple Moving Average (SMA), while the Relative Strength Index (RSI) indicator heads south at around 54, reflecting persistent selling interest. At the same time, the Momentum indicator remains flat just above its midline, while the longer moving averages are heading north far below the current level. The ongoing corrective decline could turn into a steeper fall on a break below the $1,940 price zone, a strong static support area.

The pair is bearish according to technical readings in the 4-hour chart. Gold has spent the day below a mildly bearish 20 SMA and currently battles a flat 100 SMA. The 200 SMA keeps heading north well below the current level, but technical indicators head firmly lower within negative levels, reflecting bears’ dominance.

Gold to complete higher degree correction

Apr 17 2023

Stop Loss -1.47%

Holding time 27d17hr

1958.75

Entry price

1929.88

Stop loss price