The metal is pressured by strong dollar and persisting fears of COVID-led lockdowns

Gold prices plunged dramatically, pushing the precious metal below the $1,700 mark for the first time since August 2021. The bullion has bounced slightly since then but stays under pressure today, threatening the mentioned level as bearish bias persists amid the elevated dollar.

The USD index climbed to fresh 2002 highs beyond the 109.00 figure before correcting marginally. The has settled above the 108.50 zone on Friday, retaining bullish momentum despite the overbought conditions. Should the buying pressure puck up again, the prices may target the 100.00 psychological level next. For now, the fact that the buck refrains from a deeper downside correction from fresh peaks suggests that risks remain skewed to the upside.

As such, the non-yielding yellow metal looks set to see further losses ahead. Gold is also pressured by persisting fears of COVID-led lockdowns due to China’s status as one of the world’s biggest bullion consumers. Of note, fresh data showed that China’s GDP shrank in the second quarter more than -1.5% expected to -2.6% on a quarterly basis, versus 1.4% prior. On the positive side, however, retail sales improved last month.

Technically, a break below $1,700 would pave the way towards yearly lows around $1,683. Should this level fail to withstand the pressure, the $1,676 zone will come into the market focus for the first time since March 2021. On the upside, the XAUUSD pair needs to settle above $1,750 in order to shrug off some of the pressure and retarget the descending 20-DMA that has been capping gains for a month already. In the immediate term, the metal is about to get back under $1,700 and refresh long-term lows.


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