Gold (XAU/USD) is holding onto the critical $1800 support so far this Wednesday. The yellow metal is set to extend the bearish momentum in response to the shift in the market’s perception towards the riskier assets. Attention turns towards a batch of critical US economic data and FOMC minutes due on the cards later in the day for fresh cues.
The underlying theme hinges on the expectations of a quicker global economic recovery from the pandemic blow, thanks to rapid development in the coronavirus vaccines on both sides of the Atlantic. Meanwhile, strong US Markit Manufacturing and Services PMIs released earlier this week added credence to the upbeat
Markets also cheer the easing
The short-term outlook for gold remains bearish.
The price stalls its recovery and turns south once again, although it holds well above the critical 200-daily moving average (DMA) support at $1798.
The 14-day Relative Strength Index (RSI) trends in the bearish region but not oversold yet, suggesting that there is more room to the downside. Acceptance below the 200-DMA support could trigger a sharp drop towards the May 18 high of $1765.
Meanwhile, the bearish bias remains intact so long as the metal stays below the fierce support now resistance at $1850.
Gold has confirmed a bear flag breakdown on the hourly sticks earlier in the Asian session. The price now attempts a bounce along with the hourly Relative Strength Index (RSI).
But the bulls are likely to face stiff resistance at the confluence of the pattern support and bearish 21-hourly moving average (HMA) at $1808. Further up, the pattern resistance at $1814 could be challenged.
To the downside, sellers will aim for the measured target at $1777 on a breach of the crucial support around $1800-$1798 levels.