Gold prices were on the defensive in Friday trading as the precious metal continued its descent with a break below $1800. After mounting a weak bounce from the support, the price of gold now trades at $1785.
The move lower in gold is worrying for bulls as the U.S. dollar still trades below 92.00 and could be setting up further lows. Gold has been struggling since the emergence of vaccine candidates because the two pillars of gold’s rally this year were based on economic damage from lockdowns and the expectation for big government stimulus spending.
Another reason for gold strength this year was the risk of unrest over the U.S. election and fears of a hostile transition. Trump has since instructed the GSA to go ahead with transition plans and also today he said that he would respect the decision of state electors after they convene on December 14th. This may have caused profit-taking at the start of the U.S. session as investors see a rotation out of gold with safe-haven demand decreasing into year-end.
Gold Price Technical Outlook
Gold crashed through the key $1863 support level last week to trade at lows of $1800. Although bullion was able to bounce, it was a weak move, capped by the $1820 level and we now look below $1800. The next targets are $1750 and $1700. A short here could place a stop above the 4H bar high.
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XAUUSD 4H Chart
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