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Gold Under Pressure

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Technical analysis of Forex market

Gold is retreating a little bit of Monday. The instrument is trading at 1728.60 USD; investors have been selling it for the second trading session in a row.

On one hand, investors are pretty inspired by the opportunity that quarantine restrictions may be removed in the near future. In this case, the most positive country is Japan, which is ready to cancel the status of emergency in five regions of the country ahead of the schedule. This positive moment indicates that the coronavirus pandemic is slowing down.

On the other hand, Gold can’t correct too much because there is a growing opportunity of another geopolitical conflict between the USA and China due to a new security law, which may interfere with the rights and freedom of the Hong Kong population. Risks are increasing as the White House may start to get involved in the situation.

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Physical demand for Gold is rather moderate so far – this aspect provides neither support no risks.

As we can see in the H4 chart, XAU/USD is forming a wide consolidation range around 1737.00; right now, it is trading below this level and may continue falling towards 1710.10 as a correction. In general, the pair is forming a Flag pattern. After reaching the above-mentioned level, the price may start a new growth to reach 1800.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line has broken 0 to the downside and is steadily moving within the negative histogram area, thus indicating further decline on the price chart. If the line leaves the area, the correction may be over.

In the H1 chart, after breaking 1730.00 downwards, XAU/USD is still falling; right now, it is trading to break the consolidation range at 1723.70 to the downside. Possibly, the pair may correct towards 1727.70 and then resume trading downwards to break 1715.00. Later, the market may continue moving inside the downtrend to reach 1710.10. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving to rebound from 20 upwards and then reach 50 again. After rebounding from 50 downwards, the line may return to 20.