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- XAU/USD reaches levels near $4,800 after bouncing from $4,404 lows.
- Kevin Warsh’s nomination as the Next Fed Chief triggered a sharp correction in Precious metals.
- Gold’s recovery is likely to be challenged at the $4,900 area.
Gold (XAU/USD) is trimming some losses on Monday after the sharp bearish correction witnessed on Friday and Monday’s Asian session. The precious metal has returned to levels near $4,800, trading at $4,766 at the time of writing, but still about 15% below Thursday’s highs above $5,600.
US President Donald Trump’s announcement of former Federal Reserve governor Kevin Warsh as the replacement for Jerome Powell triggered a reversal that appears to have caused a short squeeze in precious metals. Reuters reported that CME Group has hiked margin requirements for precious metal trades, which only accelerated Gold and Silver’s sell-off.
Technical Analysis: Bulls are likely to be tested ahead of the $5,000 level
XAU/USD has found some footing during the European morning session to retrace some losses, but the immediate trend remains strongly bearish. The Moving Average Convergence Divergence (MACD) line remains well below the zero line, although it has turned flat, indicating a softer bearish momentum. The Relative Strength Index (RSI) remains below 40 after picking up from oversold levels.
Upside attempts are likely to meet resistance at the intraday high, near $4,890, and at the $5,000 psychological level. Further up, the next target is the previous support area at $5,100 (January 29 low).
On the downside, immediate support is at the intra-day low of $4,404; below here, bears might be attracted to the 78.2% Fibonacci retracement of the November-January rally at $4,270.
