The strengthening factor of the US dollar on Thursday's trading yesterday has pushed the gold commodity to fall lower in the market at the end of the week.
Gold prices fell below the $1,700 level to reach around $1,689 in the New York session yesterday, hitting a 6-week low.
Putting pressure on gold trading, the strengthening of the US dollar has been driven by risk-on market sentiment following reports of restrictions on movement in the Chinese city of Chengdu due to an increase in Covid-19 cases.
Although gold is often attractive in risky markets as a safe-haven asset, the appeal of gold is more bleak as investors now prefer to hold cash.
However, there is the potential for gold to recover again due to the expectation that the United States (US) NFP employment data report that declined will depreciate the value of the US dollar again and give room for gold to rise again.
Assessing the price movement on the XAU/USD chart which measures the value of gold against the US dollar, the price was seen to continue its decline on Thursday yesterday past the 1700.00 level and reached around 1689.00 in the New York session before leveling off until the end of the session.
The price remained moving below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart as a signal of bearish trend movement.
A slight uptick on weak rates was shown in the Asian session continuing into the European session today, but the price is seen to be restrained by the MA50 level and is likely to decline again if it fails to break through.
The continued decline is seen to lead to a concentration level at 1680.00 after overcoming yesterday's daily low.
The 1680.00 level is also a price support zone that has supported the price bounce again during the decline that occurred on July 21.
Meanwhile, for the expectation of an increase in gold prices, the price that continues to rise higher beyond the MA50 barrier will signal an early change in the bullish trend with the target to test the resistance at 1720.00.
The next move higher will lead to the zone around 1740.00 before reaching back to the focus zone in late August trading at 1760.00.
