- Gold quickly reversed an intraday slide to the $1800 neighbourhood, or multi-week lows.
- The emergence of some dip-buying warrants some caution for aggressive bearish traders.
- A sustained move beyond 50-hour SMA is needed before positioning for any further gains.
Gold staged a goodish intraday bounce from the vicinity of the $1800 mark, or seven-week lows, albeit struggled to capitalize on the move. The precious metal was seen trading with modest gains, around the $1835-30 region and remained capped below 50-hour SMA through the early North American session.
Meanwhile, the early downfall confirmed a near-term bearish breakthrough a one-week-old trading range and supports prospects for additional weakness. The negative outlook is further reinforced by the fact that oscillators on the daily chart have just started drifting into the bearish territory.
That said, the emergence of some dip-buying warrants some caution for aggressive bearish traders. This makes it prudent to wait for some follow-through selling below the daily swing lows before positioning for any further depreciating move amid the prevalent cautious mood around the equity markets.
Concerns about the potential economic fallout from the highly contagious coronavirus diseases weighed on investors’ sentiment. This, in turn, was seen as a key factor that extended some support to the safe-haven XAU/USD and helped limit any deeper losses, at least for the time being.
On the flip side, a sustained strength beyond 50-hour SMA, currently around the $1840 region, might prompt some short-covering move. However, any meaningful positive move might still be seen as a selling opportunity and runs the risk of fizzling out near the $1858-62 heavy supply zone.
XAU/USD 1-hourly chart
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Technical levels to watch
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