The strengthening of the US dollar at the end of the week has dimmed the glimmer of gold that had previously given investors hope.
After the surge in gold prices that took place at the close of trading last week, investors were initially optimistic that gold would experience a higher increase in value after a relatively satisfactory performance was displayed earlier this week.
However, the atmosphere changed again when the economic growth data of the United States (US) for the third quarter was published in the New York session yesterday which recorded higher readings than forecast.
Even so, the US dollar did not continue to show significant strengthening after the published data, but the market began to examine early signs of changes in the movement of the currency king.
Thus, the price on the XAU/USD chart which measures the value of gold against the US dollar on Thursday yesterday showed a more flat movement compared to the rising pattern of the previous days.
Previously, the price was seen to have shown an increase from the level of 1640.00 until it reached a height of 1675.00 before leveling off around 1660.00 yesterday.
Failing to maintain the previous bullish pattern, further bearishness was exhibited in the European session this evening after the price started to move below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the XAU/USD chart with a bearish signal to begin.
As of 5pm local time, the price of gold has dropped to around 1650.00 with a target of 1640.00 which will be the focus to be tested again.
Passing that important zone, the decline will continue towards the support zone at 1615.00 which was hit at the end of last week's trading.
However, if prices manage to bounce back, breaking through the MA50 barrier will give investors renewed hope to expect gold to move higher.
Resistance at 1680.00 remains a focus to be tested after prices that continue to move higher will target 1700.00 to record a 3-week high.
