XAU/USD pair – Daily Chart
Gold prices in terms of US dollar (XAU/USD) dropped sharply on Wednesday, reversing a brief gain seen in the previous session, in a bid to test fresh five year lows reached at 1085.29 earlier this week. The pair faced rejection just ahead of 1100 levels and tanked nearly $ 15 during the day, finally recovering somewhat to 1094.17 at close. XAU/USD extended its losing-streak as upbeat US fundamentals released yesterday further bolstered the case for Fed rate hike this Sept.
XAU/USD stages a solid comeback today so far, heading towards 1100 – key psychological levels. The pair edged higher largely as the US dollar took a breather in its rally following stronger than expected US existing home sales figures booked yesterday. However the gains look restricted as the successful Greek vote passage on the second batch of reforms package early today may erode gold’s appeal as a safe-haven while USD bulls may jump back into bids later today on US jobs data release.
Technically, on daily charts, XAU/USD seems to have faced rejection at 1100 levels and retraced slightly from session highs. The daily RSI at 19 aims higher and remains in an extremely oversold zone, suggesting a bounce-back expected. Hence, the pair may once again retest 1100 levels, beyond which 5-DMA located at 1105 stands as the next resistance. While to the downside, the pair could retest previous lows at 1087 levels, below a break of 1090 levels.
XAU/EUR pair – Daily Chart
Gold prices in terms of Euro (XAU/EUR) extended its bearish momentum for the fourth day in a row on Wednesday, having given a descending triangle bearish breakout on Monday. The pair dropped 995.88, breaching the crucial 1000 threshold for the first time in six months. The pair received a double blow as a generalized weakness in XAU weighed on XAU/EUR while strengthening EUR/USD ahead of the Greek vote on the second reforms package also added to the downfall.
As for today’s trade so far, XAU/EUR poses a very tepid recovery, struggling to hold above the crucial 1000 barrier, bouncing-off lows reached at 999.38 levels. The pair remains undermined on the back of rising euro across the board as markets cheer the latest approval by the Greece lawmakers on the second batch of reforms, paving way for further bailout talks on Friday. While the shared currency remains supported amid a data-light session eventually weighing on the XAU/EUR.
Technically, XAU/EUR has formed a small doji on the daily charts, while the RSI at 26 has almost turned flatter indicating no clear direction for the pair. Thus, to the downside, the pair is likely to retest 995.38 (July 22 Low), below which floors open for a test of 989.20 (Jan 5 Low). The upside seems capped by the previous high around 1007 levels, beyond which the pair could test 5-DMA located at 1012.80 levels.
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