Gold falls for second day, finds support at $1220
|- Stronger US dollar weighs on gold, Wall Street rebounds.
- Gold found support above $1,220 but holds a bearish technical tone ahead of the Asian session.
A stronger US dollar pushed gold further to the downside as the metal continues to correct lower from the 3-month high it reached last week at $1,243/oz. On Tuesday, XAU/USD bottomed at $1,219 the lowest since October 18.
The move lower took place amid a stronger greenback. The US Dollar Index broke above 97.00, to the highest since June 2017. The recovery in equity prices in Wall Street limited the slide of the metal. The Dow Jones was up 1.77% near the end of the session.
Gold’s recovery from the lows was capped by $1,226 and then pulled back modestly. It was trading at $1,224 about to post the second slide in-a-row.
XAU/USD Technical outlook
Despite holding in positive ground, the daily chart indicates that the upward momentum is fading, notes Valeria Bednarik, Chief Analyst at FXStreet, as the metal is currently pressuring the 100-day moving average, which stands not far above a bullish 20 SMA at 1,216. “Technical indicators in the daily chart remain far above their midlines, but continue retreating from nearly overbought readings with the RSI currently at 54, somehow anticipating further declines ahead”, adds Bednarik.
Ahead of the Asian session, she sees technical reading in the 4 hours chart skew the risk to the downside, with price below its 20 SMA, Momentum reaching fresh weekly lows and RSI steady at around 42.
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