Gold Prices Under Pressure: Technical Analysis Indicates Potential Downside

In early Asian trading on Tuesday, August 27, spot gold experienced a sharp decline, with prices dropping below $2,510 per ounce, marking new session lows. This follows a modest gain of nearly 0.3% on Monday, where gold closed at $2,517.94 per ounce.

On Monday, driven by risk aversion, gold prices reached a high of $2,526.90 per ounce during European trading, approaching the all-time high of $2,531.60 per ounce set last week. Despite this upward momentum, FXStreet analyst Christian Borjon Valencia observed that gold’s uptrend remains intact, but buyers have been unable to push prices beyond the record high.

Valencia pointed out that if gold closes the day below $2,500 per ounce, it could signal a move towards testing the previous support level at $2,483 per ounce. A breach of this level may lead to further declines, with the next support seen at the May 20 high of $2,450 per ounce, followed by the 50-day simple moving average (SMA) at $2,406 per ounce.

Conversely, if gold manages to break through the $2,531 per ounce resistance, Valencia suggested that the next targets could be $2,550 per ounce and potentially $2,600 per ounce.