Gold investors were heartbroken when they had to see the 'bloody' gold trading affected by the United States (US) inflation data published yesterday.
The price of gold plunged to below the $2,000 level after the last time the price did not reach it for the past 9 weeks, which was in mid-December last year.
The situation occurred due to pressure on gold after the US dollar significantly strengthened following the market's reaction to the release of the important data.
US inflation for January recorded a reading that is still high, showing that the US economy is still resilient with the monetary policy applied before.
Therefore, the Federal Reserve (Fed) is seen not to lower interest rates in the near future.
As a result, the XAU/USD chart which measures the value of gold against the US dollar saw a drastic price drop.
Initially the price rose to the 2030.00 zone, but after testing for a while the price plunge was shown when the data was published in the New York session.
The price continued to pass the important level of 2000.00 and failed to bounce back up making a price correction.
After closing at around 1992.00 in the New York session, price movements remained flat around that in the Asian session this morning and some weak declines took place early in the European session.
The price of gold is seen to continue to decline lower after the plunge in prices displayed yesterday.
After passing 2000.00, the price of gold is likely to drop to 1970.00 or even lower until reaching the target of 1950.00.
However, if the price tries to show an increase again, the level of 2000.00 is seen as the nearest resistance that needs to be passed for further recovery.
Next, only a higher increase will be expected again towards 2030.00 and again to relieve the investors.
