Gold Analysis: XAU/USD may extend recovery to 5-DMA

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) ended the week on a bearish note with XAU/USD falling to fresh monthly lows at 1175.17, before recouping some losses and ending at 1179.32 levels. Gold prices witnessed a sharply sell-off below 1183.50 levels as sky rocketing global equities with the NASDAQ printing all time highs on solid earnings reports boosted appetite for riskier assets, dulling gold’s appeal as a safer bet.

Currently, XAU/USD has managed to recover from monthly lows somewhat and trades below all the moving averages at 1182.10 levels. The pair seems to extend its recovery amid a data-thin day ahead with the US dollar continued to be undermined by weak US macro data releases including the latest durable goods orders. On daily chart, the pair trades in a short-term downtrend channel and could extend its recovery to 1189.22 levels where the XAU bulls face stiff resistance of 5-DMA. A break above the last, pair may head towards a test of next resistance at 50-DMA located at 1192.14 levels. However, the upside is expected to be limited as markets remain cautious ahead of FOMC statement due on Wednesday. In the same chart, the RSI at 43.50 in the bear range aims higher supporting the recovery in XAU/USD. To the downside, if the daily low at 1178.50 fails to hold, the pair could drop to retest fresh monthly lows reached on Friday at 1175.17. A break below the last, the pair may fall further to the channel support located at 1172.29.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) witnessed a massive sell-off on Friday, ending the day sharply lower near fresh monthly lows of 1082.10, breaking below the key support at 50-DMA located at 1094.42. The XAU/EUR pair slumped largely on the back of broad euro strength despite looming Greece concerns as the US macro data led fall in the greenback pushed the euro higher across the board.

Currently, the pair seems to have bounced-off lows near the trend line support at 1081.04 levels and swung back near fresh session highs at 1089 levels. The pair climbed higher largely on broad USD rebound which dragged the shared currency lower, thereby boosting XAU/EUR. The daily RSI at 42.18 has turned higher, indicating further room for upside. The pair is expected to head higher to retest 50-DMA resistance at 1094.50 levels. A break above that level, the pair may extend further for a test of 5-DMA placed at 1100 – psychological levels. To the downside, the pair may retest daily lows at 1184.87 and below that may extend decline to the trend line support located at 1081.04 levels.

XAU/JPY pair – Daily Chart

Gold prices in terms of Japanese yen (XAU/JPY) dropped to fresh five week lows below 140k threshold at 139,881 levels, before finally closing the week regaining 140k levels amid broad based US dollar sell-off post downbeat durable goods orders data which drove the yen higher, thereby knocking-off XAU/JPY.

XAU/JPY recouped previous losses and edged higher today, hovering near session highs at 140,762 levels. The pair remained well supported above 140k barrier, bouncing-off lows at 140,219 levels. The daily RSI at 40.83 has inched higher, heading towards the bullish territory which backs the case for a solid rebound. The pair may extend its pull back to 5-DMA resistance located at 142,016 levels and beyond that may face next resistance at the trend line support-turned resistance located at 142,475 levels. To the downside, the pair may retest 140k levels and below that could retest previous lows at 139,881 levels. Overall, the pair is expected to extend its recovery as the yen remains weak given the minor pullback in the US dollar following Friday’s sell-off.