- XAU/USD’s downside appears more compelling.
- Technical set up on the daily chart favors the bears.
- Focus remains on Biden’s stimulus passage and Fed decision.
Gold (XAU/USD) witnessed a steep drop on Friday after facing rejection at the 21-daily moving average (DMA) of $1876 once again.
The sell-off drove the metal below the 50-DMA and 200-DMA supports. The bulls, however, quickly fought back control and managed to close the week above the critical 200-DMA at $1848.
Gold Price Chart: Daily
Even though gold recaptured the 200-DMA, the downside appears more compelling heading into a big week ahead.
Gold’s fate hinges on bipartisan support on US President Joe Biden’s $1.9 trillion stimulus proposal and the FOMC decision due this week.
The 14-day Relative Strength Index (RSI) points south, at 46.77, suggesting that the recent bearish streak could likely extend.
The bears need a clearance of strong support around the $1835 region to unleash losses if the 200-DMA gives way once again.
Further south, the Year-to-date (YTD) lows at $1803 could be put at risk.
Meanwhile, the bearish bias will likely persist unless the buyers sustain footing above the powerful 21-DMA resistance.
The next upside barrier awaits at the downward-sloping 100-DMA at $1883.