Extending its near-term downward trajectory for fifth consecutive session, Gold is seen building on to yesterday's steep losses and dropped to a fresh 4-week low to currently trade around $1320 level.
Better-than-expected durable goods orders and weekly jobless claims data provided an additional boost to the US Dollar and dented demand for dollar-denominated commodities - like gold. Moreover, expectation of a hawkish tone from the Fed Chair Janet Yellen’s speech at Jackson Hole Symposium is exerting further selling pressure around the yellow metal.
Meanwhile, the precious metal has failed to gain any traction despite of weaker sentiment around global equity market, suggesting that the near-term corrective move could get extended further.
Even from technical perspective, sustained weakness below an important confluence support near $1330, comprising of 50-day SMA and a a short-term trading range support (rectangular chart-pattern break-down), clearly points to continuation of the near-term weakening trend.
Technical levels to watch
From current levels, $1315 level seems to act as immediate support below which the commodity seems vulnerable to break through $1305-1300 strong support and head towards testing 100-day SMA support near $1290-92 region.
Meanwhile on the upside, trading range support break-point near $1330 now seems to restrict any immediate recovery. Even if the yellow metal manages to clear this immediate hurdle, further up-move should now be capped at $1340 strong resistance. Only a decisive move back above $1340 strong resistance would negate near-term bearish bias and help the metal to extend its upward trajectory.
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