As anticipated, XAU/USD (gold prices in terms of the US dollar) consolidated to the downside on Monday, although remained in a slim range above 5-DMA then at 1087.13, as low volumes and a lack of economic news on account of Martin Luther King holiday failed to provide fresh impetus to the bullion. While traders remained on the back foot ahead of Tuesday’s Chinese data-deluge, which could have major impact on the gold prices. China is the world’s second largest consumer of gold.
In today’s trade so far, gold keeps its range-play intact and oscillates back and forth in a $ 5 tight range. The yellow metal reversed a brief dip to lows at 1085.45 post-China GDP release and rose sharply to 1090.76 session highs as the Chinese Q4 GDP data missed estimates and fell 6.8% versus 6.9% previous. While China’s retail sales and industrial production data also disappointed markets. However, the prices failed to sustain at higher levels and turned lower as the Asian equities swung back higher and lifted overall market sentiment, and thus, weighed on gold’s safe-haven appeal. The Chinese benchmark index closed +3.22%.
Moreover, the upcoming CPI and ZEW data from the Euro zone and Germany are expected to put up a poor show, which will negatively impact the EUR/USD pair and drive the USD higher across the board. A stronger greenback makes gold expensive for holders in foreign currencies and hence, lowers the demand for the bullion. However, the US CPI report due tomorrow is expected to emerge the main driver for gold this week and gold traders eagerly await the inflation figures.
Technicals – Rising wedge pattern target at 1080-1075 still holds
On hourly charts, the pattern target for rising wedge bearish break, predicted the day earlier still remains in place and is likely to be achieved in the near-term. On daily charts, the prices have formed a small doji and remains capped between Fib 38.20% and Fib 50.0% retracement of the 2016 rise, which lie at 1091.65 and 1085.11 respectively. The RSI remains flat and holds just above the mid-lines further suggesting a lack of clear direction for now.
However, as explained above the move to the downside seems more likely and hence the immediate support is near 1085 region, a break below which floors open up for a test of 20-DMA at 1081.11 and from there to 1078.56/ 1075.47 levels (Fib 61.80% of the same rally and 50-DMA horizontal support). In case of a failure to breach 1085 support, the prices may rebound higher towards Fib 38.20% level at 1091.65, beyond which the immediate barrier would be faced at hourly 200-SMA placed at 1092.90, above which $ 1100 mark will hold the key, a breach of which will open further upside.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD hovers around 1.0700 ahead of German IFO survey
EUR/USD is consolidating recovery gains at around 1.0700 in the European morning on Wednesday. The pair stays afloat amid strong Eurozone business activity data against cooling US manufacturing and services sectors. Germany's IFO survey is next in focus.
GBP/USD steadies near 1.2450, awaits mid-tier US data
GBP/USD is keeping its range at around 1.2450 in European trading on Wednesday. A broadly muted US Dollar combined with a risk-on market mood lend support to the pair, as traders await the mid-tier US Durable Goods data for further trading directives.
Gold: Defending $2,318 support is critical for XAU/USD
Gold price is nursing losses while holding above $2,300 early Wednesday, stalling its two-day decline, as traders look forward to the mid-tier US economic data for fresh cues on the US Federal Reserve interest rates outlook.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.