A failure at $1,750 would bring the next downside target of $1,730 into the market focus

Gold price has been losing ground since the start of the week, holding below the 20-DMA on Friday. Earlier in the day, the yellow metal derived support from late-July lows around $1,750 to bounce marginally in recent trading. Still, the bullion looks set to finish the week with solid losses after a four-week winning streak.

The precious metal has been pressured by a stronger US dollar these days, with the USD index trading around one-month highs above 107.50. The US currency rallied in the aftermath of more hawkish FOMC meeting minutes than expected coupled with the subsequent aggressive signals from the central bank officials.

In particular, San Francisco Fed President Mary Daly backed either 50 basis points or a 75 basis points hike in September while St. Louis Fed President James Bullard said he is leaning towards another 75-bps rate hike next month. Also, the buying pressure surrounding the greenback intensified due to upbeat economic data out of the United States as well as geopolitical concerns over Europe and China.

Should the bullion fail to hold above the $1,750 psychological level in the short term, the next downside target near the $1,730 region will come back into the market focus for the first time in three weeks. On the upside, recovery above the 20-DMA, now at $1,767, is critical for any substantial recovery while the key bullish target for short-term buyers arrives at $1,800.

On the weekly timeframes, the XAUUSD pair stays well below the key SMAs while the RSI reversed south, suggesting the metal could stay on the defensive in the near term. In other words, gold has room for further downside at this stage as the greenback keeps benefiting from the Fed’s policy.


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