Gold began the year with high hopes that the FED would slow down its rate hikes, and eventually, cuts would follow. However, sentiment changed dramatically at the start of February. After the latest jobs report, XAUUSD fell nearly $100 in just two days, and a tight range downtrend formed, which continues to this day. But how much can gold fall? The answer to that question still remains uncertain as gold prices are still too overvalued relative to real yields. However, there is a lot of uncertainty in the markets and the debt limit date looms for the US which is positive for gold moving forward. Technically, many indicators are showing a possible dip just below 1800. Key long-term moving averages (144 and 233), last year’s 2070 to 1614 fall’s Fibonacci %38.2 level, the latest run’s middle point, and lots of local support and resistance are present in the 1770-1805 zone. If gold can hold its retreat, this zone is a perfect candidate.

As of today, ahead of the announcement of the FED’s favorite inflation gauge, the PCE deflator, the bearish trend in gold prices is still ongoing. The daily support level could be at 1818, and a break below this level might lead to gold prices dropping to around 1800. A weaker-than-expected inflation surprise, on the other hand, could give gold prices some upward momentum. However, to break the downward pressure, gold prices must pass and hold above the 1850 resistance level. Otherwise, any upward movements will remain limited and should be seen as selling opportunities until the job market shows signs of slowing.