Charts of the Week - XAU/USD – Death Cross and Gold at Oversold Territory

Charts of the Week - Technical Analysis

XAU/USD – Death Cross and Gold at Oversold Territory

• Resistance Zone: $1840 to $1850
• Key Resistance: $1820
• Major Pivot Point: $1786
• Key Support Level: $1750
• Support Zone: $1730 to $1750
• 200 Day SMA – Green Line
• 50 Day SMA – Red Line
• CBOE VIX – Volatility Index @ 27.54 +0.01 (+0.036%)

Trade Insights – XAU/USD – Chart shows Viable Short positions below the Pivot at $1786 with the first target of Key Support Level @ $1820 and with more weakness towards the Support Zone at $1730 to $1720.

Alternatively, Long positions above the Pivot at 1786 as the pair pushes higher with the first target of Key Resistance level at $1820. And then heads towards the Resistance Zone between $1840 to $1850.

XAU/USD Chart Analysis:  Directional bias - 2 Weeks 

XAU/USD chart shows that the gold prices are trading very near to the December 2021 Low of $1752. And it has already gone below January 2022 tough. Apparently, gold could break below the Key Support Level at $1750 this time on. The 50-Day SMA Red line coming from the top crossed lower to the 200-Day SMA green line. It went upwards and has brought the prices significantly down in yesterday’s session - Gold touched $1764, the intraday low mark. There could be more red sessions in line before any recovery could take place. And the Support Zone of $1730 to $1720 appears quite doable on the chart. Yesterday’s selloff was not backed by a huge volume as compared to a recent surge in the volumes on the FX pair starting in February this year.

Gold prices are echoing weakness across the precious metal prices and it shows that the pair could drop into the oversold territory on the RSI indicator showing a bearish bias of the market. The last time Gold was in Oversold territory was in August 2021 for a brief period and that was the time when the Death Cross took shape on the chart, currently, it seems the history is repeating itself.  

Fundamental Overview

The strong dollar index has now climbed above the 106.58 level and continues to shift higher, and it seems rising interest rates and Federal Reserve’s resolve to bring inflation down will continue to weaken the demand for Gold. The next FOMC meeting over interest rate decision is in July when the Feds are expected to raise interest in line with the June month hike of 75 basis points and as a result, Gold could face more weakness in the next couple of weeks.

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