Gold Analysis: XAU/EUR could rise to 1070

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) extended its three-day sell-off on Friday, plunging to fresh six week lows at 1168.93 before recovering partially to close the week at 1178.20. XAU/USD dropped from $ 1185.30 highs, giving an ascending triangle bearish breakout, after the US dollar index gained 0.51% to 95.07 points on Friday, thus putting bullion under additional pressure as investors cheered solid US manufacturing reports and upbeat consumer confidence.

Currently, XAU/USD has swung back higher within the triangle formation and trades near highs around 1184.20 levels and holds the formation support at 1178 levels, having recorded entire losses from Friday. Gold prices gained amid a broadly muted US dollar, consolidating previous gains supported by upbeat US macro data. The daily RSI at 45.43 aims higher below the mid lines indicating further room for upside. A break above previous highs at 1185.20 is required to confirm further bullish momentum. Beyond the last, XAU/USD could extend to test 50-DMA located at 1191.02. However, the upside seems limited as the US dollar is likely to extend its rally riding higher on the wave of better than expected US fundamentals. To the downside, a break below the key support at 1178, the pair may fall back in red and may retest previous lows at 1168.93.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) slumped to fresh four month lows at 1139 on Friday with the pair recouping most losses and settling the week at 1051.71 levels. The XAU/EUR pair was relentlessly sold-off on Friday as the EUR/USD rallied to fresh 2 month peak almost touching 1.13 barrier and later eased to just ahead of 1.12 mark. Moreover, broad based US Dollar upsurge also weighed on gold prices in terms of other currencies.

Currently, the pair edged higher this session and trades near highs at 1057.57 largely on a bout of short-covering rally after the recent sell-off. However, traders remain cautious ahead of this week’s UK elections which may have a rub-off on the shared currency and thus impacting the XAU pair. On daily chart, the RSI at 35.60 has inched higher, although in the oversold zone, which indicates the pair may head higher for a retest of next upside barrier at 5-DMA located at 1070.80 levels. Beyond the last, 100-DMA comes up as another resistance zone at 1075 levels. To the downside, the pair could retest 1050 – psychological level, below which floors would open for a retest of previous lows at 1039.

XAU/JPY pair – Daily Chart

Gold prices in terms of Japanese yen (XAU/JPY) finished lower on Friday at 141,421 levels, recovering from massive sell-off to 140,100 levels. The pair bounced-off the crucial trend line support at 140,104 levels and recouped more than half its slide later in the US session after the US dollar regained lost ground versus the yen, boosted by impressive US consumer sentiment figures while the manufacturing OMI came in line with expectations.

Currently, XAU/JPY trades lifted near highs around 142,200 levels largely on yen weakness versus the US dollar as the greenback continues to ride higher on the latest impressive set of US data. The pair faces stiff upside barrier at 5-DMA and 10-DMA confluence at 142,460 levels and gains might be capped at that level. The daily RSI at 48 ticks up suggesting a test of 142,460 levels, above a break of daily highs at 142,282 levels. The downside remains restricted so long as the pair hold above 141k handle as the pair is expected to remain underpinned on yen weakness versus the US dollar ahead of US factory orders data later in the NA session.