Spot gold broke through $1700 handle and fell to nine-month low on Friday, extending larger downtrend after remarks from Fed’s Chair Jerome Powell lifted dollar and bond yields.
The yellow metal is on track for the third straight weekly decline and close below pivotal Fibo support at $1725 (38.2% of $1160/$2074) that would add to strong bearish signals, generated on previous week’s close below the base of thick weekly Ichimoku cloud.
Strong fall in safe haven demand on rising optimism that the economic recovery will pick up, following declining number of new coronavirus cases and vaccine rollout, deflates gold price.
Bears eye immediate target at $1670 (June 5 trough), violation of which would risk extension towards $1644 (100WMA) and $1617 (50% retracement of $1160/$2074 rally).
Bearish studies on daily/weekly charts and negative sentiment help bears which for now ignore oversold conditions, but some price adjustment could be anticipated.
Upticks under weekly cloud base ($1760) are expected to provide better opportunities to re-join bearish market.
Res: 1700, 1725, 1748, 1760.
Sup: 1670, 1659, 1644, 1617.
