The selling pressure on gold was heavy on the day since the release of the latest PPI, with two of the X analysts pointing to the rapid sell-off in the XAU/USD cross.
PPI News Triggers Sharp XAU/USD Move
XAU/USD was sharply down after the PPI release, as noted by Manan Trader on X. His post called the move a “crazy dump” and revealed a chart that suggested that gold was heading further down after falling below the highlighted trading zone.
The chart shows the previous price action near the $4,390-$4,410 area before the price sharply declined. Clearly, a big bearish candle is forming towards $4,380, and Manan Trader’s potential route indicates that gold will continue to test lower levels before another significant drop.
There is also a double rejection around $4,390 – $4,400 that comes before the expected continuation lower.
The post directly referenced the move to the PPI release and said it was a successful call. The chart thus centered around the reaction to economic data and not a gradual downtrend.
Analyst Maps $4,350 and $4,300 Targets
Also, Zaffar Khan posted a bearish setup for the XAU/USD pair. His chart told him that a sell zone was there from $4,395 to $4,410 and that he would be better off on the sell side of the market’s subsequent drop.
The lower levels listed were $4,350 for TP1 and $4,300 for TP2, creating two downside support levels below the highlighted sell zone. The price of gold has been trading around the 4,400 price area and is breaking below the highlighted support level.
The graphic illustrated the downtrend that followed when the price closed below the previous price range consolidation.
The two X posts show a very similar downside range. Manan Trader’s chart was set on 4280 levels, while Zaffar Khan’s chart was focused on 4350 and 4300 levels. Both charts identified an important bearish pattern below $4,395–$4,410.
Key Support, Resistance, and Momentum Levels
Gold was trading around $4,356.11 per ounce at the time of this writing, losing $46.01, or 1.05%, on the day. The daily candle range is very high, from $4,324.17 to $4,435.05, suggesting high volatility and strong selling pressure during the day.
Currently, Price is close to the 100-day MA at $4,367.77 and slightly above the 50-day MA at $4,351.34. This will create a tight range that could prove to be gold’s next near-term trend maker, if a prolonged trend reversal can occur in either direction.
The highs were down following the recent retreat from the August high, indicating that buyers are not as aggressive at the highs. If the daily close can come up above $4,367.77, the bull market will improve, and this could pave the way to $4,450 and $4,600 and beyond.
If the moving-average support fails to provide the necessary support, however, the market may be exposed to a move back to $4,300, then to the stronger psychological support around $4,000.
Momentum is mixed, and the current sentiment is to consolidate before breaking out in a direction. The 14-day RSI is 47.61, which is above its neutral level of 50 but not in oversold territory, indicating bearish momentum but not extreme.
RSI also has an elevated level at 56.25, signaling that the momentum has been dragged back from its average level now that the market has weakened. As a result, traders should pay attention to the recovery off 50 by RSI in conjunction with the price action above $4,367.77; otherwise, there will be an ongoing risk of selling.
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