Now, market focus is shifting back to the 200-DMA around $1,846 that represents the immediate key support
Gold prices extended the rally to late-January highs around $1,875, registering the fourth consecutive bullish day in a row on Tuesday. However, the precious metal failed to preserve gains and retreated marginally today as the selling pressure surrounding the greenback has eased somehow while risk sentiment deteriorated amid the persisting inflation fears ahead of the FOMC meeting minutes due later today.
The bullion slipped from the mentioned highs to the $1,860 area in recent trading. It looks like the XAUUSD could see a deeper downside correction in the short term if the dollar extends the current recovery from fresh multi-week lows seen earlier this week. Now, market focus is shifting back to the 200-DMA around $1,846 that represents the immediate key support. As long as the bullion stays above this moving average, downside risks are limited in the immediate term.
The upcoming FOMC meeting minutes could bring some volatility to global markets including gold. If the central bank delivers a dovish message, the greenback would come back under the downside pressure across the board. In this scenario, the yellow metal may climb back to the mentioned tops and even refresh highs, targeting the $1,900 figure.
On the weekly charts, XAUUSD keeps trending north following a bounce from the ascending 100-SMA in March. The prices are rising for the third week in a row while the RSI on the same timeframes is pointing higher, suggesting gold could extend the ascent amid a weaker dollar in the coming days and weeks.
On the downside, the inability to stay above the $1,860 figure would pave the way towards the mentioned 200-day simple moving average. If this support gives up, the $1,825 area, followed by the $1,800 psychological level will come back into market focus.