Gold Price Analysis: XAU/USD drops to one-week lows, a test of $1900 on the cards

• XAU/USD negative momentum intact after being unable to recover $1,950.
• A stronger US dollar and falling equity prices weigh on gold.

Gold prices are falling sharply on Thursday despite the risk aversion environment. XAU/USD dropped further and bottomed at $1,921/oz, reaching the lowest level in a week. It then bounced to the upside, and currently trades at $1,925, still under pressure.

In Wall Street, main indexes are falling sharply. The Dow Jones drops 2.0% and the Nasdaq 4.10%. Techs are leading the sell-off. The yen, the Swiss franc and the dollar benefit but gold remained under pressure.

Negative outlook for gold

The price of XAU/USD is approaching the lower bottom of the recent range. Over the last three weeks is has been able to find support between $1,905 and $1,910; the mentioned zone appears to be poised to be challenged in the near-term.

If gold managed to remain above, it could bounce back toward $1,950 initially and then to the $2,000. A break lower could trigger more losses, with an initial target at the August low at $1,860.

Technical levels