Gold: XAU/USD targets $1800 following a breach of the critical $1850 level

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XAU/USD looks to threaten $1800 level amid coronavirus vaccine optimism after the yellow metal resumed last week’s bearish momentum on Monday and fell 2% to the lowest levels in four months at $1831, FXstreet’s Dhwani Mehta reports.

Key quotes

“The bright metal remains exposed to further downside risks, in the wake of the global market optimism amid vaccine progress and Biden transition process. The risk-on rally in the stocks could dash hopes of any recovery in gold, as markets will closely eye the US CB Consumer Confidence data due for release later in the NA session.”

“The path of least resistance for gold remains to the downside, as depicted by the hourly chart. The price has charted a bear pennant breakout on the given timeframe, calling for a test of the measured target at $1800.”

“Since the hourly Relative Strength Index (RSI) trends in the oversold territory, a dead cat bounce cannot be ruled out towards the pattern support now resistance at $1836. The next resistance is seen at the bearish 21-hourly moving average (HMA) at $1842. The long-held support at $1850 could then act as a strong resistance if the bulls extend the recovery momentum.”

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