The strength of gold, which followed the US inflation data published last weekend, failed to be sustained as the yellow metal declined due to a significant strengthening pressure factor by the US dollar.
In today's New York session, the focus will be on the release of US producer price index (PPI) data with the expectation of a positive report reading that could continue to push the US dollar up ahead of the FOMC meeting which will be the main investor focus event this week. .
Following the release of US inflation data showing the highest reading since December 1981, the US dollar remained aggressive in resumed trading earlier this week and also had an impact on gold.
The XAU/USD price chart, which measures the value of gold against the US dollar, has seen a price roller-coaster movement, with an aggressive surge on Friday before a drastic plunge on Monday.
The price has made a re -decline starting in the Asian session yesterday after the price increase at the close of last week’s trading session has tested the resistance zone at 1870.00.
The daily decline was recorded over 600 pips on yesterday's price chart until it re -broke the price support level when it was hit last Friday which was 1830.00.
The lower decline occurred until the price was seen reaching the support zone of 1810.00 before then making a rise again to the zone of 1830.00 which is now the latest resistance for the price in trading that continues today (Tuesday).
Trading in the Asian session this morning saw a slight increase seen testing resistance at 1830.00 continuing at the beginning of the European session, but analysts still expect the decline to continue following bearish signals with the price movement remaining below the Moving Average 50 (MA50) barrier level in the 1st time frame. hours on the XAU/USD chart.
If the decline in gold prices continues, the price that fails to break the 1830.00 level is expected to head to the 1800.00 focus target level to continue to record the latest 4 -week low.
On the other hand, if gold manages to rebound, the rise above the 1830.00 level will head to the zone around 1850.00 again before signaling for a bullish price movement.
The next continued rise will re -test the 1870.00 resistance zone after a few weeks of gold prices still failing to break through the ‘wall’ of resistance.
