The precious metal set for biggest weekly drop in a month after starting it near a one-month peak

Gold remains driven by USD dynamics, struggling to capitalize on risk-averse environment that continues to dominate global financial markets. Wall Street stocks plunged overnight following a rally witnessed in the aftermath of the Fed rate hike earlier in the week. However, the dollar failed to attract safe-haven demand on Thursday, thus pushing the yellow metal higher for a second day in a row.

The XAUUSD pair rallied towards the $1,857 zone to finish at the higher end of the trading range. However, as the buck attracted renewed demand on Friday, the bullion failed to extend the ascent and turned lower instead, challenging the key moving averages in early European deals on Friday. Gold prices are now back below the $1,850 zone, suggesting the selling pressure could persist in the near term, especially as Treasury yields are back on the rise.

Now that market players await Powell’s speech, the USD index is trading up nearly 0.7% on the day but struggling to regain the 104.50 zone so far. Should the Fed Governor fuel more robust demand for the US currency, the yellow metal may add to weekly losses during the New York session. By the way, gold set for biggest weekly drop in a month after starting it near a one-month peak.

On the weekly timeframes, gold remains stuck between the 20- and 100-SMAs, with the $1,800 handle representing the key near-term support that capped the downside pressure during the recent slide. On the upside, XAUUSD needs to make a decisive break above the 100-DMA, today at $1,890, in order to shrug off some of the persistent pressure.


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