Gold was on a bullish trend throughout the previous decade until August 2020 when it peeked above $2,000, a level it could not hold for long, as it retreated to $1,680, an area which has been acting as support for two years. Buyers had another attempt at the $2,000 level and pushed briefly above it but still couldn’t hold the gains and sellers returned.

Since then sellers have been in control as the USD has been gaining, with the FED raising interest rates in panic. That is keeping the sentiment negative in financial markets, weighing further on Gold, which has now turned into a risk asset. As a result, GOLD has been on a bearish trend since March, falling below $1,700 in late July and reaching the support area at around $1,680.

Gold Daily Chart – The 50 SMA Rejecting the Price Again

The selling pressure continues for XAU/USD

We saw a retrace higher until the middle of August, but sellers returned and pushed the price down again although they have been finding it hard to push too far below $1,700. Last week we were seeing a retrace higher, although it looked weak, and as soon as the 50 SMA (yellow) caught up with the price on the daily chart the decline resumed, sending the price below $1,700, but again there wasn’t much of a continuation and the decline stalled around that big round level.

Gold prices yesterday declined more than 1% again as the dollar jumped after the higher-than-expected rise in US CPI (consumer price index) inflation cemented odds for further aggressive rate hikes from the U.S. Federal Reserve. In India, MCX gold futures fell 1% to a near one-month low.

We have shifted our bias to short once again in XAU/USD and yesterday we opened a sell GOLD signal after the US inflation report, which closed in profit pretty quickly. Although it is still uncertain whether the selloff will send Gold below the major support at $1,680.

Gold XAU Live Chart