- Gold price started a strong downside correction from a multi-year high at $1,765.
- There was a break below a major bullish trend line at $1,720 on the 4-hours chart of XAU/USD.
- The US Gross Domestic Product is likely to contract 4.8% in Q1 2020 (Preliminary).
- The US Initial Jobless Claims in the week ending May 23, 2020 could decline from 2438K to 2100K.
Gold Price Technical Analysis
Earlier this month, gold price extended its rise above the $1,720 resistance against the US Dollar. The price traded to a new multi-year high at $1,765 and recently started a strong downside correction.
The 4-hours chart of XAU/USD indicates that the price corrected below the $1,740 and $1,720 levels. Moreover, there was a close below $1,720, 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).
The price also traded below 50% Fib retracement level of the upward move from the $1,670 low (formed on 1st May 2020) to $1,765 high.
On the downside, there are a few key supports near the $1,680 level. If the price continues to move down, it could even break the $1,670 support and test the $1,650 zone.
If there is a fresh increase, the previous support near $1,720 and the 100 simple moving average (red, 4-hours) might act as a strong resistance. A successful close above $1,720 is needed for a strong move towards the $1,750 and $1,760 levels.
Overall, gold price is likely to continue lower towards the $1,680 and $1,670 support levels. Looking at major pairs, EUR/USD spiked above the 1.1000 resistance zone, but GBP/USD started trimming gains from the 1.2350 resistance.
Economic Releases to Watch Today
- German Consumer Price Index for May 2020 (YoY) (Prelim) – Forecast +0.6%, versus +0.9% previous.
- German Consumer Price Index for May 2020 (MoM) (Prelim) – Forecast -0.1%, versus +0.4% previous.
- Euro Zone Consumer Confidence May 2020 – Forecast -18.8, versus -18.8 previous.
- US Gross Domestic Product Q1 2020 (Preliminary) – Forecast -4.8% versus previous -4.8%.
- US Initial Jobless Claims – Forecast 2100K, versus 2438K previous.