After a relatively flat price movement on Thursday, gold prices showed a drastic reaction on Friday which was affected by the ongoing Jackson Hole symposium.
The US dollar, which affects the movement of gold, appeared to strengthen again after the speech by the Chairman of the Federal Reserve (Fed) Jerome Powell was judged to be hawkish.
Powell noted that the central bank still needs to raise interest rates higher to bring inflation down to the 2% target level, but will implement policy cautiously at the September meeting.
The effect of the strengthening of the US dollar in the New York session has seen the price of gold drop significantly, but it recovered slightly when ending trading at the end of the session.
On the XAU/USD chart which measures the value of gold against the US dollar, the surge in prices that was exhibited last week was 'stuck' in the 1920.00 zone.
On Friday, the price that also tested the 1920.00 level plunged sharply below the Moving Average 50 (MA50) level on the 1-hour time frame on the chart to reach 1904.00.
The price then bounced back to close trading at the 1915.00 level.
Opening the trade earlier this week, the price hovered at the previous closing level and flattened below the Moving Average 50 (MA50) barrier throughout the Asian session.
Failing to break through, prices began to retreat at the beginning of the European session with the expectation that the drop in gold prices will continue if the US dollar continues to strengthen.
The 1900.00 zone is seen as a future target for investors to assess the price reaction that tests the RBS (resistance become support) zone.
If the zone is also broken, the decline will continue to the 1885.00 support which has been tested several times in the previous week.
However, if the surge in gold prices is successfully displayed again, it will be a bullish indicator for investors after the price breaks through the MA50 barrier and the 1920.00 resistance zone.
The next rise will extend to the 1930.00 zone before the higher target will shift at 1950.00.
