- Gold is likely to open the week with intense selling pressure under the 200-day SMA.
- XAU/USD continues to struggle as the US dollar strengthens, downside eyes $1,800.
Gold has retraced significantly after topping out at a nine-year high above $2,000 in August 2020. Recovery from the downtrend has proved to be an uphill battle for the bulls. Besides, the last two weeks have seen XAU/USD drop from the new yearly high at $1,950 to $1,825.
The pessimistic outlook has been validated after the precious metal dived under the ascending channel’s middle boundary. Intense overhead pressure is expected under the 200-day Simple Moving Average.
The moving average convergence divergence, or MACD, adds credence to the bearish narrative. This technical indicator, which follows the path of a trend and calculates its momentum, appears to be turning bearish on the daily chart. As the 12-day exponential moving average crossed under the 26-day exponential moving average, the odds for a bearish impulse increased significantly.
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XAU/USD daily chart
Gold may throw the bearish outlook out the window if support at $1,820 holds firmly. Moreover, closing the day above the 200 SMA would encourage buyers to increase their entries. If enough volume is created behind the precious metal, gold will embark on a recovery journey targeting $1,900.
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