Gold Analysis: XAU/EUR faces stiff resistance at 50-DMA placed at 1094

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) ended higher on Tuesday around 1191.70 levels, reaching fresh three week high at 1195.04 levels. XAU/USD extended its uptrend and remained elevated all though yesterday amid a softer US dollar on expectations of below estimates US macro data. However, the pair dipped near daily lows around 1185.90 shortly after the data release as the US CPI, manufacturing and new home sales surprised the markets and beat market forecasts big time. XAU/USD recouped data backed losses and resumes its upward trajectory, finally settling the day above 1190 levels.

The pair, currently, trades lower at 1189.66 levels, bouncing-off day’s high at 1192.16 levels as the pair faces strong trend line resistance at 1194.75 levels. XAU/USD inched lower largely on the back of profit booking after the yellow metal rallied to fresh three week peak in the previous session. However, a broadly weaker US dollar cushions the downside. The pair is seen struggling around 1189, and is expected to fall from current levels and may test the 5-DMA support at 1185 levels before resuming its upside momentum. The daily RSI has turned flattish at 50 levels suggesting potential a break out on either side. The pair is expected to rebound higher from 5-DMA and retest daily highs at 1191.16. A break above that level, the pair may extend further to test the trend line resistance, beyond which XAU bulls are likely to dominate taking XAU/USD higher to 1200 levels. However, on the release of US consumer durables data later in the session, XAU/USD may retreat as the data is expected to come better than the previous reading which may boost the US dollar.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) closed well above channel support of 1083.59 on Tuesday at 1092.87 levels, although bounced-off a brief dip below it at 1181.05. The pair managed to surpass the 50-DMA located 1092.90 and scored a high of 1094.02 levels. However, gains were short-lived at higher levels and the pair closed the day higher clinging on to the 50-DMA support. The XAU/EUR pair remained supported largely on a range bound movement witnessed in EUR/USD, swinging between gains and losses, unable to sustain above 1.10 mark. XAU/EUR edged higher towards the North American session as the shared currency lost ground versus the greenback on a better than expected US economic data which boosted the USD.

Currently, the pair trades subdued near lows around 1088 levels, remaining well bid above the 20-DMA located at 1086.73 levels. The pair continues to trade in a narrow range locked between 1085.80-1092.91 levels, with the upside capped by 5-DMA located at 1088 levels. Though, the upside seems to be capped by 50-DMA located at 1093.78, the pair seems to have bounced-off trend line support at 1085.28 levels. With the daily RSI standing at 51.49 and seems to inch lower, a bearish tone is reflected in the pair. To the downside, the pair may fall from current levels and retest the trend line support, below a fresh sell-off is likely to trigger knocking off the pair to immediate support at 1076 levels. However, with US data expected to come in positive, EUR/USD is expected to receive a blow which may lift the pair higher from the trend line support to retest daily highs at 1192.91 and further beyond may rise to 50-DMA. A fresh XAU buying may witnessed above 50-DMA pushing the pair higher towards 1100 levels. Overall, a generalized intraday downside bias may persist so long as the pair remains below 1092.91 levels.