XAU/USD: bearish factor

 
 
 
 
 
 
 

Against the background of the strengthening of the dollar, the price of gold continues to decline. Today, the XAU/USD pair reached a new 6-week low at 1.1710, declining towards key support levels at 1700.00, 1690.00 (EMA200 on the weekly chart), 1682.00 (Fibonacci 38.2% retracement of the December 2015 rally and 1050.00 mark).

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As you know, gold quotes are extremely sensitive to changes in the monetary policy of the world's leading central banks and, especially, the Fed. However, the other major world central banks (BOE, RB Australia, RB New Zealand) are also on the path of tightening their monetary policies, and the ECB will soon join them. Despite the high risks of a recession in the economy, the fight against inflation remains a key issue for them.

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Gold does not bring investment income, but is in active demand in situations of geopolitical and economic uncertainty, as well as a protective asset in the face of rising inflation. However, it seems that it is losing its role as a protective asset to the dollar, and in the event of a breakdown of the zone of long-term support levels 1700.00, 1690.00, 1682.00, the long-term bullish trend of gold and the XAU/USD pair may be in jeopardy. It is hard to believe so far, but the fundamental and technical picture is still in favor of just such a scenario.

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In an alternative scenario, there will be a rebound from these support levels, and a breakdown of the important resistance levels of 1742.00 (EMA200 on the 1-hour chart), 1746.00 (EMA144 on the weekly chart) will become a signal for the resumption of long positions. Breakdown of the key resistance level 1814.00 (EМА200 on the daily chart) will confirm the scenario of the resumption of the long-term bullish trend of XAU/USD.

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Support levels: 1700.00, 1690.00, 1682.00

Resistance levels: 1742.00, 1746.00, 1759.00, 1768.00, 1800.00, 1814.00, 1832.00, 1875.00

Trading recommendations

Sell Stop 1708.00. Stop Loss 1727.00. Take Profit 1700.00, 1690.00, 1682.00

Buy Stop 1727.00. Stop Loss 1708.00. Take-Profit 1742.00, 1746.00, 1759.00, 1768.00, 1800.00, 1814.00, 1832.00, 1875.00