#XAUUSD @ 1645.24 Gold drops to over a two-year low on Friday as the USD rally remains uninterrupted. (Pivot Orderbook analysis)

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• Gold drops to over a two-year low on Friday as the USD rally remains uninterrupted.
• Bets for more aggressive Fed rate hikes, elevated US Bond yields underpin the buck.
• Geopolitical risks, the risk-off mood could lend some support to the safe-haven metal.
• A trading range breakdown supports prospects for an extension of the depreciating move.

The pair currently trades last at 1645.24.

The previous day high was 1684.95 while the previous day low was 1655.69. The daily 38.2% Fib levels comes at 1666.87, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1673.77, expected to provide resistance.

Gold drops to its lowest level since April 2020, around the $1,641 area on Friday and confirms a fresh breakdown below a one-week-old trading range. The XAU/USD maintains its offered tone through the early North American session and seems vulnerable to slide further.

The relentless US dollar buying remains unabated on the last day of the week amid expectations for a more aggressive policy tightening by the Fed. In fact, the USD Index, which measures the greenback’s performance against a basket of currencies, hits a fresh 20-year peak and is seen driving flows away from the dollar-denominated gold.

The US central bank earlier this week signalled that it will hike interest rates at a faster pace to combat stubbornly high inflation. A number of other major central banks also delivered rate increases this week, which continues to lift government bond yields. This exerts additional downward pressure on the non-yielding gold.

That said, the risk of a further escalation in the Russia-Ukraine conflict offers some support to the safe-haven precious metal. Russian President Vladimir Putin announced an immediate partial military mobilization, which, along with recession fears, continues to weigh on investors’ sentiment and could limit losses for gold.

From a technical perspective, a sustained break below the previous YTD low, around the $1,654-$1,653 region could be seen as a fresh trigger for bearish traders. This might have already set the stage for additional losses. Hence, a subsequent slide towards the next relevant support, around the $1,600 mark, remains a distinct possibility.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1647.89 at the time of writing. Pair opened at 1671.26 and is trading with a change of -1.4 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1701.37, 50 SMA 1732.87, 100 SMA @ 1777.47 and 200 SMA @ 1829.16.

The previous day high was 1684.95 while the previous day low was 1655.69. The daily 38.2% Fib levels comes at 1666.87, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1673.77, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1656.32, 1641.37, 1627.06
• Pivot resistance is noted at 1685.58, 1699.89, 1714.84

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