- XAU / USD extends losses for the fourth day in a row to test support at $ 1,850.
- Gold is weakening due to risk aversion as cases of COVID-19 remain on the rise.
- A breach of $ 1,850 could accelerate gold’s downtrend in the near future.
Gold futures headed south for the fourth day in a row on Thursday, to test key support at $ 1,850, which so far remains intact as the pair has rebounded to $ 1,860 .
XAU / USD Extends Losses in Risk Free Market
The relentless growth of the second wave of COVID-19 has come back to the fore after the United States reported a death toll of 250,000 on Wednesday and New York City decided to close schools to curb the increase contagions.
The news offset investor optimism over promising trial results for some coronavirus vaccines, rekindling concerns about the economic consequences of further lockdown measures and dampening the moderate risk appetite seen in the previous days. .
The US dollar was the biggest winner in this scenario, rallying against its main rivals after a six-day decline. Gold prices retreated against a stronger greenback, extending their reversal from last week’s high of $ 1,900 to test the low of the last four-month trading range at the $ 1,850 level mentionned.
Gold may accelerate its downtrend below $ 1,850 support
XAU / USD has graced the $ 1,850 support area and so far remains in the trading range in the mentioned level and $ 1,900 on the upside. A bearish breakout below $ 1,850 (end of September low) would increase downward pressure and could lead the pair towards $ 1,795 (mid-July low) and finally $ 1,760, the 50% Fibonacci retracement. of the rally from March to July.
On the other hand, the pair should break through the psychological level of $ 1900 and $ 1910 and the confluence of the 50 and 100 day SMAS to ease the bearish momentum and return towards $ 1960 (intraday high) and $ 1995 (high of the September 1st).