Adding to the gloom for gold investors at the opening earlier this week, the value of the precious commodity continued to fall to even lower levels.
A hawkish statement by Federal Reserve (Fed) Chairman Jerome Powell in Jackson Hole at the end of last week has triggered a strengthening of the US dollar.
This has also had an impact on gold assets which were affected to see a decrease in value in the last trading sessions last week.
Analysts see the pattern of price increases displayed last week forming a price correction pattern (correction) and will resume the bearish trend this week.
If you look at the price movement on the XAU/USD chart which measures the value of gold against the US dollar, the price is seen trying to break through the barrier zone at 1760.00 last Thursday, but failed to continue rising higher.
On Friday, the price showed a clear bearish signal for gold as the price dropped back below the Moving Average 50 (MA50) barrier on the 1-hour time frame and closed the week-end trade around 1735.00.
The price drop continued in the Asian session this morning, passing last week's level towards the support zone at 1720.00.
It is likely that the decline will continue beyond that zone with the potential to reach 1700.00 or lower to record a new 6-week low for gold.
On the other hand if the price manages to bounce back this week, the resistance zone at 1760.00 will again be a target to test.
An increase beyond the resistance zone will trigger expectations for a bullish trend change again.
