The bullion came under renewed pressure as dollar demand has recovered a bit due to some deterioration in risk sentiment
Gold priced gained over 2.5% last week, having bounced from July lows registered below $1,765. However, the bullion failed to confirm a break above the 20-DMA and finished marginally lower on Friday, staying under some pressure at the start of a new trading week. On Monday, the precious metal is barely holding above the $1,820 area, a break below which would pave the way towards the $1,800 psychological level.
The bullion came under renewed pressure as dollar demand has recovered a bit due to some deterioration in risk sentiment. However, the greenback stays on the defensive in a wider picture, with the overall bearish trend remaining intact. On the other hand, a still weak USD could help to boost recovery in gold prices following the recent sell-off. However, further positive news in the vaccine front will likely cap the upside potential anyway.
In other words, the outlook for gold prices remains weak even as the dollar stays on the back foot nearly across the board. In the immediate term, the key resistance is represented by the mentioned descending daily moving average, today at $1,843. The precious metal needs to see a firm recovery above the $1,850 area in order to see more robust gains in the medium term. As long as the bullion stays below this hurdle, bearish risks continue to persist.
On the downside, the yellow metal needs to hold above the $1,820 region to preserve gains above the $1,800 figure that acts as the key support zone in the short term. The RSI has turned lower in the neutral territory on the short-term timeframes, suggesting the path of least resistance is to the downside at this stage. If the $1,800 support gives up, the next significant support could be seen at $1,725 where the summer bullish trend started.
