- XAU / USD extends losses for the fourth day in a row to test the support at $ 1,850.
- Gold is weakening due to risk aversion as COVID-19 cases continue to rise.
- The breakout of $ 1,850 could accelerate the near downtrend for gold.
Gold futures They have headed south for the fourth day in a row on Thursday, to test key support at $ 1,850, which, so far, remains intact as the pair bounced higher towards $ 1,860.
XAU / USD spreads losses in a risk-off market
The relentless growth of the second wave of COVID-19 has returned to the spotlight after the United States reported a death toll of 250,000 on Wednesday and New York City decided to close schools to curb the rise in contagions.
This news has offset investor optimism about the promising test results of some coronavirus vaccines, reigniting concerns about the economic consequences of new lockdown measures and curbing the moderate risk appetite observed in previous days.
The US dollar has been the biggest winner in this scenario, rebounding against its main rivals after a six-day slide. Gold prices have eased against a firmer dollar, extending their reversal from last week’s high of $ 1,900 to test the bottom of the last four months’ trading range at the mentioned $ 1,850 level.
Gold could accelerate its downtrend below $ 1,850 support
XAU / USD has touched the support at $ 1,850 and remains within the trading range so far within the mentioned level and $ 1,900 to the upside. A bearish break below $ 1,850 (late-September lows) would increase bearish pressure and could drive the pair towards $ 1,795 (mid-July lows) and finally $ 1,760, the 50% Fibonacci retracement of the March rally. to July.
In contrast, the pair should break above the psychological level of $ 1,900 and $ 1,910 and the confluence of the 50 and 100 day SMAS to ease the bearish momentum and return towards $ 1,960 (intraday high) and $ 1,995 (September 1 high) .
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