Gold Price Could Extend Decline Below $1,550
- Gold price is struggling to climb above the $1,620 and $1,640 resistance levels.
- A major bearish trend line is forming with resistance near $1,616 on the 4-hours chart of XAU/USD.
- The US ISM Manufacturing PMI decreased from 50.1 to 49.1 in March 2020.
- The US Factory Orders could increase 0.2% in Feb 2020 (MoM).
Gold Price Technical Analysis
This past week, gold price followed a bullish path above the $1,550 resistance against the US Dollar. The price even managed to climb above the $1,600 resistance area before it faced hurdles.
The 4-hours chart of XAU/USD indicates that the price struggled to continue above the $1,640 area (a multi-touch support and resistance zone).
A high was formed near $1,641 and the price recently corrected lower. It broke the $1,620 support level and the 200 simple moving average (4-hours, green). Besides, there was a break below the 23.6% Fib retracement level of the upward move from the $1,454 low to $1,641 high.
It even failed to maintain a bullish bias near the $1,580 level and the 100 simple moving average (red, 4-hours). The main support on the downside is near the $1,550 level.
The 50% Fib retracement level of the upward move from the $1,454 low to $1,641 high is also near the $1,550 level to act as a strong support.
On the upside, the price is likely to struggle near the $1,620 and $1,640 levels. There is also a major bearish trend line forming with resistance near $1,616 on the same chart. A successful break above the $1,620 and $1,640 levels could set the pace for a rally towards the $1,700 level.
Fundamentally, the US ISM Manufacturing Index for March 2020 was released by the Institute for Supply Management (ISM). The market was looking for a sharp decline from 50.1 to 45.0.
The actual result was better than the forecast, as the US ISM Manufacturing PMI decreased from 50.1 to 49.1 in March 2020.
The report added:
The New Orders Index registered 42.2 percent, a decrease of 7.6 percentage points from the February reading of 49.8 percent. The Production Index registered 47.7 percent, down 2.6 percentage points compared to the February reading of 50.3 percent.
Looking at EUR/USD, the pair failed to stay above the 1.1000 support area, while GBP/USD maintained a bullish tone above the 1.2350 resistance.
Economic Releases to Watch Today
- US Initial Jobless Claims - Forecast 3500K, versus 3283K previous.
- US Factory Orders Feb 2020 (MoM) - Forecast +0.2%, versus -0.5% previous.