The yellow metal failed to continue the strengthening momentum on the XAU/USD price chart, which measures the value of gold against the US dollar, as yesterday's trade again saw a bearish pattern following the strengthening of the US dollar.
The strengthening of the US dollar continued after the ISM survey data of the service sector in the United States (US) published in the New York session yesterday recorded a positive reading compared to forecasts.
After that, the dollar index also remained strong hovering above the 110.00 level while the 10-year US bond yield also managed to follow in the footsteps of the dollar index by increasing up to 3.37%.
Investors are looking forward to the FOMC meeting this month with expectations that the Federal Reserve (Fed) will make an aggressive interest rate hike for the third time in a row by 75 basis points to fight high inflation.
Measuring the value of the gold commodity price against the US dollar on the XAU/USD pair chart, the price has shown a daily plunge of around 280 pips on Tuesday yesterday after the price failed to pass the support become resistance (SBR) zone of 1720.00 which was tested in the early trading of the Asian session yesterday.
The retracement of the price below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart signals a bearish trend for the expected price movement to shrink to a lower level.
If the decline in gold prices continues, the target is for the price to go to around the 1680.00 level, surpassing last week's low and also recording the latest 7-week low.
A further decline past the important support zone will mark the latest low for the 2-year trading period, possibly reaching up to 1640.00.
But, if the price bounces back and manages to break through the MA50 barrier level, investors will start to prepare for gold to rise again after the bullish trend reversal signal.
The price barrier zone at 1720.00 will be the initial target for prices to be tested again before the higher increase is seen to continue towards the zone around 1740.00.
The next rise will lead to the price focus resistance zone at 1760.00 and record the latest 2-week high for the precious metal.
