- Gold recovery found sellers at $4,160 before retreating to the $4,120 area.
- Easing trade war fears and a firm US Dollar have crushed precious metals in the last few days.
- XAU/USD is on a downward correction with bears focusing on the $4,000 support area.
Gold bounced up after reaching the target of a Double Top pattern, at $4,005 on Tuesday, but upside attempts have been halted way below previous support, at $4,185, which leaves the immediate bearish trend intact and the $4,000 support area at a short distance.
The announcement that US President Trump will meet its Chinese counterpart Xi Jinping in South Korea next week and the more conciliatory tone of Trump’s latest comments towards the Asian country have boosted hopes of a trade deal, which has improved market sentiment, sending precious metals tumbling.
Technical Analysis: Gold’s bearish correction has finally arrived
What goes up has to eventually come down, and Gold is no exception. The precious metal had rallied nearly 35% in the last two months and is now performing a well-awaited correction. The double top at $4,380 and Tuesday’s bearish engulfing candle in the daily chart confirm that view.
The rejection at the $4,160 on Wednesday’s early European session highlights the bearish momentum. The 4-hour RSI is low but not yet at oversold levels, and the USDollar Index is picking up, which adds pressure on the yellow metal and suggests that a retest of the $4,000 support is on the cards.
Further down, the $3945 area, where the pair found support on October 7, 9, and 10, emerges as the next target ahead of the October 2 low, at $3,845. To the upside, the intraday high at the $4,160 area and the October 17 low at $4,185 are closing the path towards the all-time high at $4,380.
