Gold came under fresh selling pressure on Wednesday. As FXStreet’s Haresh Menghani notes, XAUUSD seems vulnerable near the monthly low of $1,890.

Deteriorating global economic outlook, inflation concerns could lend some support

“Prolonged COVID-19 lockdowns in China to curb the latest outbreak further dampened the market mood. Apart from this, the continuous rise in inflationary pressures could also lend support to the XAU/USD, which is considered a hedge against rising prices. This warrants some caution before placing aggressive bearish bets.”

“Sustained weakness below the $1,890 horizontal support will reaffirm the negative bias and pave the way for additional losses. Gold could then accelerate the fall towards the 100-day SMA, currently around the $1,875 region. Some follow-through selling should pave the way for a fall towards intermediate support near the $1,850-$1,848 zone en-route the very important 200-day SMA, currently near the $1,833-$1,832 area.

“The overnight swing high, around the $1,911 region, now seems to act as an immediate hurdle ahead of the $1,918 horizontal level. Sustained strength beyond might trigger a short-covering move towards the $1,940 region, above which the recovery momentum could get extended to the $1,962 resistance zone.”

See – Gold Price Forecast: XAUUSD to only abandon its rally on a slip under $1,780-$1,763 – DBS Bank