VOT Research Desk
The price of gold (XAUUSD) is under pressure above $1,708 early on Wednesday morning in Europe, paring recent gains near a one-month high.
In doing so, The Bright Metal captures the market’s angst in the wake of the preliminary US midterm election results. However, a recent bull flag chart pattern gives purchasers reason for optimism before Thursday’s important release of the US Consumer Price Index (CPI) data.
The US dollar pares losses near the seven-week low while reversing a two-day downturn due to growing concerns about the US government being in deadlock as a result of the most recent mid-term election reports.
Despite this, the US Dollar Index (DXY) shows modest increases as of press time, hovering around 109.70. The recent commodity problems in China may also be a factor on the XAUUSD pricing.
With the most recent addition of 8,335 for November 2008, China reports the greatest numbers of new COVID cases in six months, while also recording a new virus-led lockdown in Guangzhou’s second district.
Moving forward, gold traders could pay special attention to political and economic developments for brand-new cues before Thursday’s US inflation report.
The metal might experience greater declines if the Republicans win at least one of the two houses. However, a potential slowdown in the US CPI might later protect purchasers.
Gold Technical Analysis
The monthly top in gold prices has caused MACD to hint at a bear cross, but the yellow metal maintains the bull flag chart pattern and keeps investors hopeful as long as the price doesn’t move over the $1,705 support level.
Even if the bullion breaches the $1,705 support level, the $1,700 level and a one-week-old rising trend line, close to $1,678, may provide difficulties for the XAUUSD downward.
Alternatively, a breakout over the $1,715 resistance level will start a new run higher and emphasise the $1,765 potential goal.
However, the $1,730 peak reached in October and the high around $1,735 in September might put the bulls to the test.
Overall, the price of gold is still stronger, barring a break through the $1,680 support.
