$1,800 is the next target for sellers

Gold D1 24-11

The break to the downside in gold yesterday came after the US PMI readings, where the dollar strengthened and that saw price break below the key support around $1,850.

Sellers drove price to its lowest levels since 21 July and the momentum is continuing into today a little with gold down 0.3% near $1,830 currently.

From a technical perspective, the break below the late September lows near $1,850 sees sellers establish more downside momentum with little in the way now before a potential test of the $1,800 level.

The 200-day MA (blue line) around $1,797 also adds to that being a key support region for buyers as sellers will start to explore the range between $1,800 and $1,850.

The key fundamental factor that dragged gold lower came two weeks ago, being the Pfizer vaccine news and since then, gold has struggled to regain any upside momentum beyond $1,900 with more vaccine optimism flowing through.

That said, easy central bank policies that will stay in place over the next few years will still provide a more positive backdrop for gold in the big picture.

All things considered, that is likely going to help keep gold underpinned barring any major shift in the fundamental landscape over the coming months.

However, for now you have to respect the technicals and after the consolidation since September, gold is finally breaking out to the downside after a failed attempt to break higher upon being pulled back by vaccine optimism.

$1,800 is the next obvious target but I reckon we could even see a deeper correction towards the consolidation range in May to June around $1,720-50 before dip buyers step in with more conviction to stop the rot.