Gold commodity trading continued to weaken throughout the week until reaching a three-week low above the $1,760.00 price level in yesterday's New York trading session.
The gloomy movement of gold was influenced by the strengthening factor of the US dollar heading into the end of the week with the focus revolving around the monetary policy of the Federal Reserve (Fed) after investors continued to digest the published minutes of the FOMC meeting.
In the latest statement yesterday (Thursday), the President of the San Francisco Fed, Mary Daly stated that in order to get rates slightly above 3% by the end of this year, it is necessary for the central bank to make an increase of 50 or 75 basis points next month.
Fed President St. Louis, James Bullard was more hawkish with support for a 75 basis point rate hike for the third time in a row at the September meeting.
The US dollar is seen continuing to strengthen to higher levels after signals by several policymakers to continue aggressive interest rate hikes until inflation returns to the central bank's target.
Meanwhile, also affecting the movement of gold and monitored by investors, the US 10-year bond yield which rose to the highest level touched in one month earlier this week has limited gold trading.
Examining the price movement on the XAU/USD pair chart which measures the value of gold against the US dollar, the price is seen to be still maintaining the bearish trend that started earlier this week from the 1800.00 resistance zone
Continuing until yesterday's New York session trading, the price which continued to decline to lower levels has been seen to successfully break through the price support level at 1760.00.
If you look at the price movement in yesterday's European session, the price initially showed an increase and tested the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart at around 1772.00, but the price failed to break through the barrier level indicating that the price movement signal is still in a bearish trend.
The price drop still continues today (Friday) but at a slower pace in the Asian and European sessions below the 1760.00 zone, and is expected to continue in the New York session.
If the downward pattern is maintained, the price is likely to head towards the RBS (resistance become support) zone of 1740.00 before stopping at the 1720.00 zone for a continued decline by recording the latest 3-week low for gold.
However, investors are likely to take cautious measures against profit taking activities that may occur and cause gold prices to bounce back.
A price increase above the 1760.00 level will again test the MA50 barrier level for investors to assess the direction of further gold price movement.
If the price surge continues, the previous focus zones will still be targeted such as the SBR zone (support become resistance) 1780.00 and also the resistance 1800.00.
