XAU/USD ticker symbol representing price of gold Wednesday witnessed a meltdown. This retreat came on the heels of the longest string of record highs ever. The drop was enough to drag the price down to around $3,749.63. This relatively low intraday high has caused some serious ruminations among traders and investors. The pullback comes on the heels of strong recent gains, suggesting more volatility could lie ahead in the gold market.
XAU/USD is trading at the high end of its weekly range even after cutting back Tuesday’s advance. Our broader movement shows that a big corrective trend is still in formation. The reality is sentiment overall is still in bullish positions in the short term. Traders should pay attention to the 20 Simple Moving Average (SMA) as this is a powerful defense level. This important fulcrum level is presently at $3,736.00.
Looking at the technical picture for XAU/USD, the 100 and 200 SMAs are both rising sharply. At the same time, the shorter 20 SMA is placed comfortably higher above them. This divergence is a positive longer-term sign, even in the face of the current corrective pullback. Nonetheless, given the recent bullish bias, near-term resistance levels may still present headwinds for XAU/USD as it works to establish a floor.
XAU/USD resistance levels can be seen at $3,758.80, $3,779.15 and $3,791.00. All three of these barriers are going to take a lot of momentum to overcome, particularly with the recent correction downward. If XAU/USD falls under pressure further, the supportive areas are $3,736.00, $3,722.54, and $3,707.40. A breach beneath these support levels might indicate more bearish action.
The 4-hour chart for XAU/USD shows that the technical indicators are crashing. This steep drop is the clearest sign yet that the momentum has dramatically shifted in favor of sellers. These indicators are still declining from extreme overbought levels. As they near their midlines, a correction may be on the way if current trends persist.
Market analysts have their eyes on the continues XAU/USD trend. If it remains under the vital support area of $3,736.00, then the cryptocurrency analysts predict a short-term corrective dive would proceed. The interplay between support and resistance levels will be crucial in determining the next steps for gold prices in the coming days.