By Barani Krishnan
Investing.com -- All that glitters isn’t gold, is the saying.
Yet, the yellow metal itself is barely glittering these days.
In Friday’s session, gold plunged briefly beneath the key $1,800 level on New York’s Comex, accelerating a selloff that began in mid-April
Although it did recapture that level after finding support in the $1,700 territory, it wasn’t enough to undo the damage from earlier in the week that left it on the path to a fourth straight weekly loss that’s dinged roughly $165, or 8%, from its value since the week ended April 8.
Gold’s tumble on Friday, as in recent days, came on the back of a resurgent dollar, which scaled fresh 20-year highs. The Dollar Index, which pits the U.S. currency against six other majors, did retreat to a session low of 104.5 after peaking at 105.05 earlier in the day.
While that helped gold retrace some of its losses, the change barely impacted the directional charge in the dollar, which analysts expected to chart new two-decade highs in coming days on speculation over how hawkish the Federal Reserve could get with its next U.S. rate hike.
“Only a sudden U.S. dollar sell-off is likely to change the bearish technical outlook [of gold ]," said Jeffrey Halley, who oversees Asia-Pacific markets’ research for online trading platform OANDA.
Front-month gold futures for June on Comex was at $1,809.34 per ounce by 12:00 PM ET (16:00 GMT), down $15.26, or 0.8%, on the day. The session low was $1,797.45 — a bottom not seen since Jan. 30. Week-to-date, June gold was headed for a decline of almost 4%.
Despite Friday’s rebound from the lows, gold could revisit $1,700 territory if it fails to clear a string of resistance from $1,832 to $1,836, $1,844 and $1,856, cautioned Sunil Kumar Dixit, chief technical strategist at skcharting.com.
“Since the current trend has turned bearish, sellers are very likely to come at the test of these resistance areas,” said Dixit, who uses the spot price of gold for his analysis.
“Decisive closing above the range can extend recovery to $1,880, failing which bearish pressures will push gold down to $1800 - $1780, and extend the decline to $1,760 in the week ahead,” added Dixit.