- XAU / USD came under heavy bearish pressure early in the US session.
- Gold could continue to weaken against the US dollar with a daily close below $ 1,850.
The pair XAU / USD it fell sharply in the last few minutes and hit its lowest level since mid-July near $ 1,838. At time of writing, the pair is trading around $ 1,840, down 1.64% on the day.
Renewed USD strength and market risk appetite appear to be hurting gold. Data released by IHS Markit revealed on Monday that private sector business activity in the US expanded at an impressive rate in November. Manufacturing PMI and Services PMI rose to 56.7 and 57.7, respectively, and both readings beat analysts’ estimate by a wide margin.
With the initial market reaction, the US Dollar Index (DXY), which remained depressed around 92 for most of the day, rose sharply and erased most of its daily losses. At time of writing, the DXY was down just 0.05% on the day at 92.30.
Meanwhile, reflecting market optimism, the major Wall Street indices continued to rise. At the moment, the Dow Jones Industrial Average and the S&P 500 are up almost 1% on the day.
Gold technical outlook
With this latest drop, the XAU / USD pair broke below key support around $ 1,850 (Fibonacci retracement of 61.8% from June-August rally). A daily close below that level could send the pair down to $ 1,800 (psychological level / 200-day SMA). Also, the Relative Strength Index on the daily chart is moving down towards 40, confirming the short-term bearish outlook.
On the upside, the $ 1,850 area now acts as the initial resistance before $ 1,876 (daily high).
Daily chart
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
