Gold retreats from 3-week tops amid modest USD recovery
|Gold reversed majority of its early gains to three week tops near $1249 level and has now moved on the brink of breaking into negative territory.
A modest greenback recovery, with the key US Dollar Index bouncing off multi-week troughs, seems to be a key factor prompting traders to take some profits off the table. It is worth mentioning that the precious metal has rallied from $1222 to $1249 over the past six trading sessions after the Fed decided to raise interest rates but left its policy outlook unchanged.
The perceived less hawkish Fed triggered a sharp slide in the US treasury bond yields and weighed heavily on the greenback, which eventually benefitted dollar-denominated commodities - like gold.
Meanwhile, a tepid recovery in the European equity markets, albeit still holding in bearish territory for the day, seems to weigh a bit on the precious metal's safe-haven demand and is collaborating to a minor retracement from closer to monthly highs resistance near the $1250 region.
Technical outlook
Carol Harmer, Founder at charmertradingacademy.com writes, "we know 1244 was a good level...we have been to 1249 today...so we do need to break 1251 to see another return to the highs...Now we have already broken the 200 day EMA but the simple M/A is lurking at 1259....Now this really combined with the 61.8 fib was what held the prior Gold rally at 1263...so we know hat between 1259 and 1263 there is going to be a lot of profit taking and fresh sellers...."
"Support as we know is at 1236 and 1226 and we are buyers on dips to these lower levels...." she added.
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