A selloff in the equity market and a new wave of flight to the dollar on Thursday provided the perfect combination to knock out gold, which slipped to 1810 in thin trading on Friday morning, falling to its lowest level since early February.

Right now, its up to gold to decide whether we see a double top formation or whether the bulls are gaining strength and liquidity ahead of a new multimonth rising momentum.

The current decline in the price makes us keep a close eye on further developments. Yesterday, gold took a sharp plunge under the 200 SMA, which is often a bearish factor for the instrument. A consolidation of the week under 1830 would reinforce that signal.

This would open the way for another roughly 25 drop into the 1350 area, the area of the 20152018 highs.

If we see an uptick in buyers in the hours and days ahead, we could say that gold is in a correction. Potentially, a reversal to the upside from these levels could signal the start of a new wave of longterm growth, the first impulse of which was in 20182020, followed by a prolonged wide side trend. A potential bull target, in this case, could be the 2500 area.

Source FXPro