Gold fell below $2 000 first time in a week

Gold fell below $2 000 first time in a week

2020-08-12 • Updated

XAU/USD is decreasing for the third day in a row. What are the reasons?

What happened?

It all started from Friday’s NFP report. US non-farm payrolls and unemployment rate came out better than analysts expected. As a result, the US dollar surged, while gold dipped down. After the yellow metal’s value lost nearly $80, analysts became cautious, that it might be something bigger than just a short correction. Indeed, when one red candle followed another one, the market participants wouldn’t like to miss great opportunities to take profit. It leaded to the massive gold sell-off.

Moreover, the current risk-on sentiment added headwinds to XAU/USD. Trump launched an executive order of $400 per week of unemployment benefits. However, disputes over the whole stimulus package between Democrats and Republicans continue. Nevertheless, gold bears shrugged off those disputes and focused more on the overall risk-on sentiment.

Technical tips

On the 4-hour chart, we can see that the gold price has a pullback towards the $2 000 level after breaking it out. The broken support switched to the resistance. As a rule, the price bounces off the resistance and continues falling down. It should meet the next support at the $1 970 level, which it failed to cross during the period of the end of July – the beginning of August. If it manages to break down this strong support, it will open doors towards the next support at the low of July 30 at $1 950. On the flip side, if gold jumps above $2 000, it may surge to the resistance line at $2 035, which it has touched several times already. Follow further news on gold!




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