Gold Analysis: XAU/EUR heads towards 1100 – psychological levels

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) rallied to fresh three month highs at 1232.37 on Monday before closing the day almost unchanged at 1224 levels. Gold prices initially rallied amid broad USD weakness following the recent run of weak US macro data. However, in the US session, USD bulls jumped back into the bids on the back of rising treasury yields, dragging XAU/USD lower. The pair managed to remain lifted above all the moving averages, bouncing-off lows of 1221.58.

Currently, XAU/USD halted its upward trajectory and dropped sharply from 1224.60 high, breaching the 5-DMA support located at 1220 levels and trades near lows of 1217.25. The pair gave back previous gains and dived deep in red largely on profit-taking as traders sought to lock-in gains after the recent upsurge. While the greenback resumes its recovery path from three month lows against its major peers. The daily RSI at 58 has turned lower suggesting the pair could drop further. At the moment, the pair finds good support at 200-DMA located at 1216.40. A breach of the last, the pair may accelerate losses to 1212 levels where the 100-DMA lies. To the upside, the pair may retest 5-DMA support-turned resistance at 1220 levels and beyond that may extend to 1227 – next resistance. Overall, XAU/USD is likely to remain supported so long as it breaches 200-DMA support as US housing data due later in the NA session may throw fresh light on further USD moves.

XAU/EUR pair – Daily Chart

As anticipated, gold prices in terms of Euro (XAU/EUR) did test the 100-DMA resistance located 1084.56 and failed to surpass, rebounding lower to 1081.01 level at close on Monday. The pair extended its upside bias and rallied largely on the back of weakness seen in the euro against the US dollar. The EUR/USD pair dropped and eventually lost the 1.13 handle in the American session which pushed XAU/EUR higher to fresh three week highs.

At the time of writing, the pair trades higher at 1090.17, retracing from a new three-week high of 1092.17. The pair faced rejection at 50-DMA upside barrier located at 1093.50 and quickly eased-off multi-week highs. XAU/EUR pierced through the 100-DMA located 1085.60 and spiked to fresh highs as the shared currency was relentlessly sold-off globally amid the latest chatter about extension of ECB QE program on seasonal reasons. The daily RSI at 55 aims higher indicating more room for upside. A break above 50-DMA at 1093.50, the pair is expected to extend gains and may test the crucial psychological levels at 1100 mark. To the downside, 20-DMA located at 1075 acts as a major support and losses may be cushioned by the last. However, with the moving averages and technical indicator supportive, the pair may maintain its upbeat momentum with all eyes on the upcoming EZ CPI and German ZEW figures.

XAU/JPY pair – Daily Chart

Gold prices in terms of Japanese yen (XAU/JPY) prolongs its winning streak and reached fresh three month highs on Monday at 147,443, extending beyond 147k barrier. The pair rallied largely on yen weakness as the US dollar rebounded sharply from fresh three month lows taking USD/JPY near 120 handle. However, the XAU/JPY pair failed to sustain at higher levels and fell back on the 146 handle, ending the day higher at 146,786 levels.

XAU/JPY edged lower in today’s trade and remained supported above 146k barrier, although gave back previous gains as the yen stood resilient despite extended broad USD strength. A break below 146k levels, the pair could drop to 5-DMA support at 145,800 levels. Below the last, selling pressure may intensify dragging the pair to 145k threshold. The pair may remain pressured ahead of US housing data later today and tomorrow’s Japanese GDP data. The Japanese GDP is expected to have expanded in the Q1 2015, the GDP print is expected to show, which may boost the Japanese currency.