Gold Price Analysis: XAU/USD remains depressed near multi-week lows, around $1880

• A combination of factor kept exerting pressure on gold for the third consecutive session.
• Technical selling below the $1900 horizontal support contributed to the ongoing downfall.

Gold maintained its offered tone through the early North American session and was last seen trading around the $1880 region, just above six-week lows touched earlier.

The precious metal added to this week’s losses and witnessed some follow-through selling for the third consecutive session on Wednesday. The downward momentum pushed the commodity to the lowest level since August 12th, around the $1973 region, and was sponsored by a combination of factors.

The US dollar shot to two-month tops on the back of concerns over the ever-increasing COVID-19 cases and the overnight hawkish comments by the Chicago Fed President, Charles Evans. This, in turn, was seen as one of the key factors that continued weighing on the dollar-denominated commodity.

Adding to this, a bullish trading sentiment around the equity markets dented the precious metal’s safe-haven status. The risk-on environment was reinforced by a goodish pickup in the US Treasury bond yields, which further collaborated towards driving flows away from the non-yielding yellow metal.

Wednesday’s downfall could further be attributed to some technical selling on a sustained weakness below the $1900 strong horizontal support. Hence, some follow-through weakness back toward testing August monthly swing lows, around the $1863 region, now looks a distinct possibility.

Market participants now look forward to the US economic docket, highlighting the release of the flash version of the US Manufacturing and Services PMI. This, along with the second day of Congressional testimony by the Fed Chair Jerome Powell, will be looked upon for short-term trading impetus.

Technical levels to watch