Gold is down a bit on Monday. The instrument is trading at 1728.60 USD. The investors have sold it for the second consecutive trading session.
On the one hand, investors are largely inspired by the opportunity to remove quarantine restrictions in the near future. In this case, the most positive country is Japan, which is ready to cancel the state of emergency in five regions of the country ahead of schedule. This positive moment indicates that the coronavirus pandemic is slowing.
On the other hand, gold cannot correct much because there is an increased chance of another geopolitical conflict between the US and China due to a new security law, which may interfere with the rights and freedoms of Hong Kong residents. The stakes are rising, as the White House may begin to get involved in the situation.
Physical demand for gold is fairly moderate so far
As we can see in the H4 chart, XAU/USD forms a wide consolidation range around 1737.00; At the moment, it is trading below this level and may continue to decline towards 1710.10 as a correction. In general, the pair forms a flag pattern. After reaching the aforementioned level, the price may start a new growth, reaching 1800.00. From a technical point of view, this scenario was confirmed by the MACD Oscillator breaking its 0 signal line to the downside and steadily moving within the negative chart area, indicating further decline on the price chart. If the line leaves the area, the correction may end.
On the H1 chart, after breaking down 1730.00, XAU/USD is still falling. It is now trading to break the consolidation range at 1723.70 to the downside. The pair is likely to correct towards 1727.70 and then resume trading to the downside to break 1715.00. Later, the market may continue to move inside the downtrend to reach 1710.10. From a technical point of view, this scenario is confirmed by the Stochastic Oscillator: its signal line for rebound moves from 20 upwards and then reaches 50 again. After bouncing from 50 down, the line might go back to 20.