Gold drops from record high $3,578 to $3,511, critical data ahead
- Gold steps back from $3578 record high as retails book profit ahead of key ADP and Jobless Claims.
- Markets by and large price in 97% probability of 25 BPS rate cut.
- As prices pullback on retracement, buyers defend $3511
- $3555 turns into immediate hurdle, keeps upside capped.
Gold reached our target zone $3578 yesterday and todays early Asian session witnessed a sharp $67 drop to $3511.
The sell off came as a result of retail profit booking ahead of upcoming key data announcements, ADP Nonfarm Employment Change and Initial Jobless Claims as well as tomorrow's upcoming Non Farm Payrolls.
Despite the strong selling, buyers have defended $3500 psychological zone though recovery off the lows remains challenged by overhead resistance $3555.
If Gold bulls do not succeed clearing through $3555 with a strong close above the zone, downside retracement may extend lower.
Immediate support sits at $3530 below which next downside may come for $3522-$3515 below which correctional decline will extend to $3502-$3492.
Next downside target zone is $3575 aligning with 38.2% Fibonacci retracement of $3310-$3578 bullish wave followed by 4 hourly 50 EMA $3465.
On the flip side, consolidated break above $3555 will retest $3565-$3575 above which break above $3578 will prompt extension of bullish wave to $3586 and next leg higher $3608 followed by $3637.
There is risk of elevated volatility during key data release and possibilities exist of either extended correction to above mentioned support zones or rebound towards higher target zones depending on markets quick reaction to $3555 and $3578.
Author
Sunil Kumar Dixit
SK Charting
Sunil Kumar Dixit is Chief Technical Strategist and founder of SK Charting, a research firm based in India. He tracks Precious Metals, Energy, Indices and Currency Pairs. He also participates as an expert panellist on Channel Television, Nigeria.
