Gold Bulls In Trouble As the US Dollar Snaps Losing Streak

Gold (XAU/USD) experienced another brutal beating in the early European session on Thursday as the commodity fell to a daily low of $1,926 courtesy of the fresh bull run in the US dollar (DXY).

The greenback was met with strong demand across the board following the central bank’s announcement that they planned on scaling back the dollar repository as the Coronavirus pandemic-induced market crisis eases.

The yellow metal is struggling to recover from yesterday’s drop to $1,927 as the dollar took advantage of the post-FOMC market influence despite the weakness around the US Treasury bond yields.

Meanwhile, the risk-averse market tone amid uncertainty over the US economic recovery remains a source of support for the precious metal ahead of the US Jobless Claims data scheduled for release later today.

The renewed Sino-US trade optimism appears to be a barrier for further upside swings in gold. A recent Bloomberg report cites that both countries are planning on resuming delayed trade talks.

Gold (XAU) Value Forecast — August 20

XAU/USD Major Bias: Bearish

Supply Levels: $1,939, $1,9,60, and $1,983

Demand Levels: $1,923, $1,900, and $1,890

According to our hourly chart, a head-and-shoulders pattern is beginning to take shape, indicating a fresh bearish pattern. If bulls fail to defend the $1,923 key support, we could see yet another sell-off that could take gold down to the $1,900 psychological line. The last line of defense for bulls will be the $1,890 level, which is the base of our prevailing trendline. Further declines could see the August 12 low ($1,862) come into play.

On the flip side, a good defense of the $1,923 level could help gold facilitate a bounce to the $1,939 resistance and the $1,960 pivot level again.

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