Gold Analysis: XAU/USD likely to test 100-DMA at 1212.45 levels on poor US data

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) witnessed an extremely volatile session on Thursday with XAU swinging widely between gains and losses finally settling lower at 1199.07, just shy of 1200 marker. Gold prices edged higher all through the day and reached day’s high at 1209.14 just ahead of a flurry of US economic releases. The pair held on to gains and remained at higher levels following release of poor US housing and jobs data which calmed Fed rate hike worries, boosting XAU bulls. However, the gains were short-lived and the pair fell back in to losses below 1200 levels after a Philly Fed manufacturing report beat expectations and sent the metal to an intraday low of 1,194.67 levels.

Currently, XAU/USD extends gains beyond 1200 levels and trades around 1204.50, retreating from session highs posted at 1207.78 in the last hours. On the daily chart, the pair clings to a strong support around 1996.70, where 50-DMA and the trend line support coincide. The pair remains heavily bid amid broad USD weakness following yesterday’s US data led weakness while traders remain cautious ahead of crucial US CPI print and consumer sentiment data due later in the North American session.

The RSI at 53.19 lies in bullish territory aims higher suggests more upside in the making. However, with the hourly RSI at 57.36, turned sharply lower, the pair is expected to drop further from current levels and test 10-DMA located at 1202.75 levels. The pair is expected to bounce-off that level and rebound higher to test 100-DMA placed at 1212.45 levels as markets widely anticipate US numbers to miss estimates following suit of the recently released downbeat data series. However, if the US data tops estimates than XAU bulls may be badly hurt, knocking down the pair to retest 50-DMA levels. Overall, with the technical indicator and the moving averages favouring upside, gold prices are more likely to rebound if there is a big miss on the US CPI & consumer sentiment data.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) ended sharply lower on Thursday at 1114.59, clinging to the channel support of 1112.70 and bouncing-off a brief dip below that level. The pair fell from 1136.65 daily highs as the shared currency strengthened versus the US dollar despite lingering Greece concerns following IMF’s Greece repayment rejection, dragging XAU/EUR lower. Moreover, bearish US macro data bolstered the euro further pushing gold prices in EUR to fresh weekly lows at 1110.15.

Currently, the pair trades almost unchanged near 1116 levels, forming a doji on daily chart indicating indecisiveness. Moreover, the pair has given a bearish flag pattern break down yet another time, clearly indicating more room for declines. However, the pair finds good support at 20-DMA located at 1110.70 and the daily RSI at 53.67 has turned flattish suggesting equal chances of a confirmation of bearish flag channel breakout or a rebound from current levels.

Meanwhile, markets are awaiting key US CPI and UoM consumer confidence due later in the session which may set a clear direction for the pair. To the upside, XAU/EUR may rise from current levels and extend to test 1122 levels - confluence of 5-DMA and 10-DMA above a break of daily highs at 1118.20. XAU bulls may take over subsequently taking the pair higher to test previous highs at 1136 levels. To the downside, the pair retests daily lows at 1111 levels and below that level retest 20-DMA located at 1110.69 levels. A fresh sell-off is likely to trigger below 20-DMA which may drown the pair to 1100 – psychological levels, below which floors are expected to open for a test of 50-DMA located at 1092.20 levels.