- Gold price has plunged below the critical support of $1,836.00 firmly.
- Investors have shifted the spotlight on Fed Powell’s testimony.
- The market participants should brace for underperformance from the US PMI.
Gold price (XAU/USD) has witnessed a steep fall after failing to sustain above the critical hurdle of $1,840.00 in the early European session. The precious metal is hovering around the cushion of $1,835.00 and an extension of a downside move looks possible as uncertainty ahead of the Federal Reserve (Fed) chair Jerome Powell’s testimony cannot be ruled out.
The US dollar index (DXY) has displayed a modest rebound after re-testing Monday’s low at 104.23. A sideways move is expected from the DXY as investors are awaiting Fed’s testimony to take informed decisions. Apart from Fed’s testimony, US Purchase Managers Index (PMI) will remain in focus, which is due on Thursday.
The Composite PMI is seen higher marginally to 53.5 from the prior print of 53.4. While the Manufacturing and Services PMIs are indicating a severe underperformance. The Services PMI is seen significantly lower at 49.1 against the prior print of 53.2. Also, the Manufacturing PMI is expected to shift lower to 54.7 from the former figure of 55.7.
Gold technical analysis
The gold prices have given a downside break of the Descending Triangle whose horizontal support is placed from $1,836.04 while the downward sloping trendline is plotted from Monday’s high at $1,845.54. The primary trendline placed from last week’s high at $1,857.58 has acted as a major barricade for the gold bulls.
Gold bulls witnessed a steep fall after failing to defend the 50-period Exponential Moving Average (EMA) at $1,838.26. Meanwhile, the Relative Strength Index (RSI) has slipped into the bearish range of 20.00-40.00, which signals more downside ahead.
Gold intraday chart
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