With the bearish flag nearing completion due to the intraday violation of the lower edge of the consolidation area, gold prices look poised to initiate further decline, if the price picture on the XAUUSD daily chart is to be taken seriously.
Gold prices are starting off this Monday under pressure following a second consecutive losing week that took the pair towards the $1870 price level. The fundamentals have centred around coronavirus vaccine news, with Pfizer/BioNTech expecting to have their vaccine approved in the UK this week. Moderna also expects to have emergency use approval from the FDA soon, which could set up a mass vaccination campaign in the US in December. This would be a fitting close to a year which has seen huge roller coasters in the financial markets.
Further strengthening the coronavirus vaccine optimism are comments from the European Commission President Ursula von der Leyen. Bloomberg quoted Von der Leyen as saying that the EU’s version of the US FDA (European Medicines Agency) remains in close contact and collaboration with the FDA to achieve synchrony in coronavirus vaccine approvals. Von der Leyen also said that emergency use approval in the EU could come as early as late December, which opens the door for coordinated vaccinations in two regions hardest hit by the pandemic.
This would promote risky sentiment and cool bullish gold price action. Gold price is currently down by 0.2% on the day.
Technical Outlook for Gold Price
A look at the XAUUSD daily chart shows that the violation of the flag’s lower border on Thursday, November 19 lacked follow-through support from sellers. This allowed for a pullback that failed to get past the role-reversed lower flag border. This border now acts as a resistance at the 1869.39 price level.
The technical expectation for a bearish flag is for the price to break to the downside in continuation of the pole’s trend move. However, 1850.78, is also close to where the 78.6% Fibonacci price level is found. This has so far ensured strong support which has kept prices up since the last dip of September 2020.
A breakdown of 1850.78 would open the floodgates for sellers, allowing them to target 1821.55 as well as sub-1800 support targets at 1788.90 or even 1762.51.
Gold Price Daily Chart
