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Gold (XAU/USD) plunged for the second day in a row, reaching a low of $1,732.50 a troy ounce, its lowest since September 26, 2021.
Gold accelerated its decline as fears of a global recession undermined investor confidence. The US dollar index reached a high of 107.04 thanks to its safe-haven status, appreciating against all of its main rivals despite the increasing odds of an economic downturn in the country.
USDX extended the rally and peaked at 107.04, its highest level in two decades amid expectations of an aggressive rate hike from the Fed, which in turn weighed on gold.
So far, the bulls have been given no respite by the prevailing risk aversion, which tends to benefit the safe-haven precious metal. Investors will most likely be bearish on gold until after Friday's jobs data.
On the weekly chart, we can see that gold has reached a high of 1,732. This level coincides with a series of monthly supports that gave gold a rebound in March and September 2021.
The weekly chart also clearly shows a downtrend channel that started when gold reached a high of 2070. Gold is likely to continue its downtrend in the medium term and could reach the 200 EMA zone located at 1,686.
A technical bounce is expected in the coming days due to oversold conditions on daily and 4-hour charts. The key zone we should expect for a good technical rebound is 7/8 Murray (1,750). Above this level, gold is likely to continue bouncing and could reach the top of the downtrend channel at around 1,820 in the coming days.
In the event of a technical bounce from 1,735, it will be an opportunity to buy as long as gold trades above the low of 1,732. The target can be placed at 1,750, 1,770, and 1,820.
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