Gold Price Drops Toward $1,700, Upsides Capped

Technical analysis of Forex market

Key Highlights

  • Gold price started a fresh decline below the $1,800 and $1,780 support levels.
  • A key bearish trend line is forming with resistance near $1,780 on the 4-hours chart.
  • EUR/USD remained well bid above 1.2000, whereas GBP/USD settled below 1.4000.
  • The US ISM Services PMI is likely to remain stable at 58.7 in Feb 2021.

Gold Price Technical Analysis

After struggling to clear the $1,850 resistance, gold price started a fresh decline against the US Dollar. The price settled below the $1,800 support zone to move into a bearish zone.

The 4-hours chart of XAU/USD indicates that the price even settled below the $1,765 support zone, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

There was also a break below the $1,730 support and the price traded close to $1,700. A low is formed near $1,707 and the price is struggling to recover higher. An initial resistance is near the $1,745 level.

The first major resistance is forming near the $1,765 level (the recent breakdown zone). It is close to the 50% Fib retracement level of the recent decline from the $1,815 high to $1,707 low. There is also a key bearish trend line forming with resistance near $1,780.

On the downside, the $1,700 zone is a strong support. Any more losses might lead the price towards the $1,650 support.

Overall, gold price is trading in a bearish zone below $1,765 and $1,780. Looking at EUR/USD and GBP/USD, both pairs are showing bearish signs below 1.2100 and 1.4000 respectively.

Economic Releases to Watch Today

  • Germany’s Services PMI for Feb 2021 – Forecast 45.9, versus 45.9 previous.
  • Euro Zone Services PMI for Feb 2021 – Forecast 44.7, versus 44.7 previous.
  • UK Services PMI for Feb 2021 – Forecast 38.8, versus 49.7 previous.
  • US Services PMI for Feb 2021– Forecast 58.9, versus 58.9 previous.
  • US ISM Services PMI for Feb 2021 – Forecast 58.7, versus 58.7 previous.