Gold prices (XAU/USD) succumbed to fresh selling pressure during the Tuesday Asian trading session. There was a huge impact on the rare metal — its values dropped below $3,300. Gold is approaching a one-week low set yesterday. Changing economic indicators and the recent, if modest, strengthening of the US dollar are causing market participants to react.
Those soaring gold prices have seen a recent decline. This sign of falling has proven that the market is really missing out on the bounce yesterday after touching a one-week low. Gold’s failure to sustain a breakout above the 200-hour Simple Moving Average (SMA) has turned trader sentiment bearish. Many are gravitating to a bearish prediction. As a result, the pressure to sell has increased, leading to fears of further decreases in worth.
Analysts are getting glued to the gold market. They think a drop below $3,294 — or $3,293 to be optimistic — would signal the start of a bearish trend. Such a movement could make the market vulnerable to an accelerated decline towards the $3,246 to $3,245 area, which corresponds to the swing low marked on May 29. Observers are understandably cautious, warning that more weakness could take prices much deeper into bear territory.
Once gold prices exceed the twin resistance levels of $3,377 and $3,378, a new opportunity will arise. Such a step would make it likely a serious attempt to break the key psychological barrier of $3,400. If prices can clear this level on a sustained basis, it might be enough to ignite an intraday short-covering rally. This rally could push prices back towards the $3,352-$3,353 resistance.
Ongoing market conditions continue to suggest that short-term oscillators on the hourly charts have developed negative traction, paving the way for continued intraday weakness. The 100-hour SMA also hovers near the $3,333 – $3,334 area. We expect this level to serve as a strong resistance for any advance in gold prices.
Aside from the geopolitical unrest, market participants are focusing particularly on upcoming economic data releases that have the ability to influence gold prices. And don’t forget, the US Consumer Price Index (CPI) is released on Wednesday. Then, on Thursday, we’ll have the PPI for finished goods. These reports would have a real impact on gold market sentiment and trading decisions.