Gold Price Analysis: XAU/USD to dip below the $1810 mark

Gold (XAU/USD) has been extending its decline, changing hands at around $1820 after topping $1850 earlier in the week. XAU/USD’s path of least resistance appears down as the rally in platinum group metals dulls gold’s attractiveness, FXStreet’s Dhwani Mehta reports.

Key quotes

“Negatively affecting the risk tone is the lack of fresh developments on the massive US stimulus front, which adds to the downside in the inflation-hedge gold. Markets are resorting to taking profits off the table on their US dollar short positions after the recent slide while gold’s rejection above the $1850 level also warrants caution for the bullish buyers.” 

“The surge in the platinum group metals (PGM), in the wake of the expectations of swifter economic recovery from the coronavirus pandemic-led downturn, diminishes gold’s attractiveness as an alternative store of value.”

“Backing the downside bias, gold trades below all the major averages on the given timeframe while the 14-day relative strength index (RSI) points south below the midline. Therefore, a test of the Feb 8 low of $1808 remains inevitable, below which the January 18 low of $1803.”

“To the upside, recapturing the 21-DMA at $1839 is critical for the XAU bulls to take on the fierce resistance around $1858, the confluence of the 50 and 200-DMAs. The next stop for the buyers awaits at $1869, the horizontal 100-DMA.”