Gold Analysis: XAU/JPY could drop to 141,600

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) witnessed almost a USD 13 fall in gold prices on Monday, finally ended the day at 1199.17, just shy of 1200 marker. The XAU/USD pair reversed Friday’s gains and slipped below 1200 levels as the US dollar was caught by a renewed bid wave, riding higher on upbeat fundamentals and Fed’s rate hike talks back on table. The pair once again failed to test 100-DMA resistance and bounced-off highs at 1209.40, well below the 100-DMA located at 1212 levels.

Currenctly, XAU/USD displays a trend line break down on daily charts and extends its downslide near 1192 levels. The pair accelerated losses below 20-DMA support located at 1195 and fell to fresh weekly lows at 1189.99 levels. The daily RSI at 48 aims lower suggesting further case for downside. Also, the US dollar has picked up strength across the board pushing gold prices further in to red. As seen on the daily chart, the pair is likely to test the next support at 1181 levels, below a break of daily lows at 1189.99 levels. A fresh sell-off is expected to trigger below 1181 support which may knock-off the pair to previous lows at 1178. Overall, a generalized intraday downtrend persists so long as the pair remains below 1200 threshold where the 50-DMA and 5-DMA converge.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) made higher highs on daily chart on Monday advancing to fresh ten week highs to 1142.89 before giving back gains and ended lower at 1134 levels. The pair failed to hold gains at higher levels and closed within the channel as the shared currency recovered from fresh four week lows versus the USD, dragging XAU/EUR lower.

Currently, the pair trades lower around 1131.30 levels, clinging to 5-DMA support placed at 1127.42 levels. The pair seems to consolidate in a narrow range with the upside capped by channel trend line resistance at 1140 levels. At the moment, the shared currency seems to have stalled its downslide versus the US dollar awaiting EZ retail sales data which may take the pair lower to test 5-DMA. The daily RSI at 63 has turned lower indicating more room for declines. However, the pair is expected to bounce-off 5-DMA support at 1127.42 levels as the upcoming US retail sales data due later in the North American data is expected to show an uptick which may drag EUR/USD lower. Subsequently XAU/EUR may rebound and swing back higher to test the channel trend line resistance at 1140 levels on anticipated broad euro weakness. Overall, an upside in XAU/EUR may be expected unless it breaches critical 5-DMA support.

XAU/JPY pair – Daily Chart

Gold prices in terms of Japanese yen (XAU/JPY) dropped sharply on Monday and settled the day at 143,957 levels, holding on to the 50-DMA support at 143,765 levels. The pair slipped from 145,351 highs and edged lower largely on yen strength following the Prime Minister’s advisor Hamada’s pro exchange rate comments stating that the Japanese currency is too low and that 105 would be the appropriate level for yen.

The pair extends its descent for the second straight session with XAU bears taking over below a break of 144k levels, knocking off the pair to 142,541 lows. The pair breached the major support at 20-DMA located at 143,205 levels and remains below that level, currently trading around 143,054 levels. The daily RSI at 48 aims lower pointing to extension of the underlying bearish trend. To the downside, the pair may retest daily lows and below that further extend losses till 142k barrier. Selling pressure is expected to intensify below the 142k threshold, dragging the pair lower to the trend line support at 141,600 levels. The upside seems limited and may remain capped by the 50-DMA support-turned resistance at 143,660 levels. Overall, XAU/JPY is expected to keep losses as the yen strength is likely to extend in the day ahead, dragging the pair lower.