- Stronger US dollar weighs on gold prices, DXY at five-day highs.
- XAU/USD could be headed toward $1930 and to test $1900.
Gold prices dropped further during the American session, falling to $1,937 the lowest since last Friday. From Tuesday’s top it fell more than $50. Yesterday XAU/USD approached the $2,000 area before reversing sharply to the downside.
As of writing, XAU/USD trades near the lows, under pressure as the US dollar holds onto gains versus European majors. The DXY is rising for the second day in a row, hovering above 92.70 and staging an important recovery after falling 30 hours ago to 91.70, the lowest level in two years.
The key driver in gold’s slide is the stronger dollar and takes places despite lower US yields and higher equity prices. The risk-on mood is not stopping the dollar from rising across the board.
Correction with more legs to go
On Tuesday, XAU/USD finished marginally higher and far from the top, suggesting some exhaustion. It failed to remain above the 20-day moving average and also above the $1,970 area. The current slide if extends will likely challenge the $1,900 zone. A daily close below $1,900 should clear the way for a test of the August low.
On the upside, a close well above $1,975 should be a positive development for gold, suggesting more gains to $2,000 and toward the resistance area at $2,015.
Technical levels
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