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  • Gold breaks key support levels and drops sharply.  
  • A stronger US Dollar is the main driver, after yesterday’s FOMC rate hike and today’s US data.  

Gold prices fell for the second day in a row and broke to the downside after spending weeks moving near the $1,200 zone. The move lower points to further losses from a technical perspective.  

The metal lost more than $10 today, the day after another rate hike from the Federal Reserve. Today’s US data warrants more hikes. Monetary policy expectations continue to be a key driver for the US Dollar. The DXY is having the best performance in a month. It also broke a range and rose from 94.30 to 94.95, reaching the highest level since September 17.  

The stronger dollar pushed gold to the downsides. The ounce bottomed at $1,181.20 and then bounced modestly to the upside. The recovery was capped by $1,185. Near the end of the session was trading at $1,184, almost $14 below the level it had at the beginning of the week.  

Technical outlook  

Valeria Bednarik, Chief Analyst at FXStreet, point out that the daily chart shows an increased bearish potential as the price finally detached from a still flat 20 DMA, although the 100 and 200 DMA maintain their strong downward slopes far above the shorter one. “The Momentum indicator in the mentioned chart remains around its mid-line but the RSI is now heading firmly south at around 38.”  

She adds that XAU/USD broke below the base of a symmetrical triangle, a sign of continuation and in see risk skewed to the downside also short-term. Support levels could be seen at 1,183.05, 1,173.80 and 1,160.10.