Gold Price Extends Decline Below $1870 Post-US GDP, But How Far Can This Go?
The greenback continued to see demand following the release of upbeat us third-quarter GDP data on Thursday. Data from the Bureau of Economic Analysis show that the US economy expanded by 33.1% on an annualized basis. This was better than the market consensus of 32.0% and allowed the economy to bounce back from the 31.4% slump of the previous quarter.
This allowed the XAUUSD pair to extend yesterday’s intraday fall by 0.39% at the time of writing, sending the pair towards near one-month lows around the $1860.
The expansion of the US economy by the highest amount on record allowed gold prices to meet with fresh offers around the $1886 price area, allowing it to drift further into negative territory.
As risk aversion hit the markets in yesterday’s London session, the US Dollar reasserted its status as the world’s global reserve currency, attracting significant demand across several assets and currency pairs with only six days to the US elections. US equities also had a modest rebound from the data, and we also bored about the lower-than-expected initial jobless claims figures for the week, for the denting the attractiveness of gold as a safe-haven asset.
Technical Outlook for Gold Price
Gold price action on the XAUUSD daily chart shows that gold has extended its decline after initial gains on the day. It is now testing the 1869.39 price support but requires confirmation of two successive closing penetrations below this support. A confirmation of the breakdown of this support level opens the door towards the 1850.29 price level (78.6% Fibonacci retracement from the 14 July to 7 August swing move). 1821.55 (88.6% Fibo retracement) lines up as a further downside target.
On the flip side, a recovery from 1869.39 could occur if the breakdown of that area is not confirmed. This move opens the pathway for buyers to try to retake 1898.48 or 1900.76. Other targets to the north line up at 1932.32 and 1940.15, as well as 1954.77.
It is getting harder to predict what price will do as the US elections approach, especially as the US Congress has adjourned with no stimulus in place. It is best to take what the market can give at this time.