Gold Price Analysis – XAU/USD eyes $1,700 as key support fails
- XAU/USD came under strong bearish pressure in early American session.
- Sellers look to remain in control of gold unless it manages to reclaim $1,720.
- $1,700 aligns as the next target on the downside.
The XAU/USD pair spent the previous week fluctuating in a relatively tight range that was defined by key technical levels and closed the week with small losses at $1,732. After starting the new week in a calm manner and moving sideways around $1,730, however, gold came under strong bearish pressure in the early American session and touched its lowest level in more than two weeks at $1,705.80. As of writing, XAU/USD was down 1.45% on a daily basis at $1,707.80.
In the absence of significant macroeconomic data releases and fundamental drivers, a technical selloff seems to have got triggered after XAU/USD broke below the key $1,720 handle. Additionally, the rebound witnessed in the US Treasury bond yields is providing a boost to the greenback and further weighing on the pair.
The benchmark 10-year US Treasury bond yield, which lost nearly 2% earlier in the day, is currently rising 0.55% at 1.682% and the US Dollar Index is posting modest daily gains at 92.85.
The only data from the US showed on Monday that the Federal Reserve Bank of Dallas’ Manufacturing Business Index in March rose sharply to 28.9 from 17.2 in February. This reading beat the market expectation of 12.1 by a wide margin but was largely ignored by market participants. There won’t be any other data releases featured in the US economic docket in the remainder of the day.
Gold technical outlook
On the daily chart, the Relative Strength Index (RSI) indicator turned south and dropped to 40, confirming the bearish shift in the near-term outlook. The next support is located at $1,700 (psychological level, March 12 low) and a daily close below that level could open the door for additional losses toward $1,680 (the ending point of the Feb. 2-Mar. 8 drop).
On the upside, $1,720 (former support, Fibonacci 23.6% retracement of the Feb. 2-Mar. 8 drop) now aligns as the first hurdle. XAU/USD could look to confirm that level as resistance before sliding to the $1,700 area. If it manages to reclaim that level, next resistance is seen $1,725 (20-day SMA) ahead of $1,745 (Fibonacci 38.2% retracement).