Spot gold is approaching a key support zone after seeing sharp downswings since last week.
How low can gold go before the bulls step back in?
Gold (XAU/USD): 4-hour
Gold (XAU/USD) 4-hour Chart by TradingView
Increased U.S. dollar demand and concerns over China’s economic growth have contributed to lower gold prices in the past few days. XAU/USD turned from its $2,480 all-time highs down to its current levels near $2,370.
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The pair is seeing fresh bearish pressure as traders stay on the sidelines ahead of top-tier U.S. data releases.
How low can XAU/USD go before it sees sustained demand again?
We’re eyeing the $2,360 zone that lines up with the S1 ($2,369) Pivot Point line as well as the middle of a technical range in the 4-hour chart.
If the pair extends its sharp downswings and busts through the mid-range support, then more bears may come in and drag XAU/USD to the S2 ($2,336) line if not the $2,300 range support zone.
A bounce from the mid-range levels, on the other hand, exposes XAU/USD to a move back to its previous highs. Look out for bullish candlesticks and then bullish momentum above the potential support zone, which could take gold to the Pivot Point line ($2,426) or its previous $2,447 highs.