XAU/USD pair – Daily Chart
Gold prices in terms of US dollar (XAU/USD) was sharply sold-off on Wednesday, plunging to fresh weekly lows 1185.65 levels, before regaining some strength and closing the day at 1189.96 levels. XAU/USD broke below the trend line support at 1195 levels, below which losses were accelerated pushing the pair to one week lows. The sell-off was triggered by better than expected US existing home sales data from the US which rebounded in March after the Feb lull.
Currently, XAU/USD extended weakness and trades in a narrow USD 5 range locked between 1184.32 and 1189.34 levels. The pair fell to fresh weekly lows in early Asia today after the USD bulls continued to cheer upbeat US macro data which heightened earlier Fed rate expectations ahead of FOMC next week. However, XAU bulls quickly took over and rebounded near highs as a fresh bout of profit-taking on USD longs pushed the pair higher.
At the moment, the pair trades dead flat around 1188.80 levels breaking below all the moving averages with the daily RSI flat at 45.67 in the bear range. This suggests that the pair awaits fresh incentives ahead of a data-heavy EUR calendar and NA session which may provide further direction on dollar moves. To the downside, the pair may drop to the next support at 1182.80 (April 14 Low) levels. A break below that level, XAU/USD may drop further to the crucial trend line support located around 1179 levels. On weaker US macro data, XAU bulls may be boosted, driving the pair higher for a retest of 50-DMA located at 1194 levels and beyond. Overall, upcoming macro data is expected to shape further direction for XAU/USD.
XAU/EUR pair – Daily Chart
Gold prices in terms of Euro (XAU/EUR) broke below the major support at 20-DMA located at 1114.09 and ending lower on Wednesday at 1108.67 levels. The pair plunged from 1121.80 highs after the release of above estimates US housing data and subsequently touched lows at 1104.29. The pair declined as the euro stood resilient around 1.08 handle despite broad USD strength, keeping the pair undermined.
Currently, the pair trades in a symmetrical triangle pattern, elevated around 1110 levels, with the upside capped by 5-DMA and 20-DMA resistance located around 1112-1114 zone. At the moment, the daily RSI at 50.72 has ticked higher indicating more room for upside. Hence, the pair may retest daily highs at 1111.58 and beyond that may test the above mentioned resistance zone. The shared currency remains weak versus the US dollar testing 1.07 barrier and supports the case for an uptrend. A break above 1114 levels, the pair may test the trend line resistance at 1118 levels.
The downside seems limited and may remain restricted by a critical support around 1100 – psychological level, as the euro weakness is expected to prevail as the shared currency is expected to ignore raft of upcoming PMI readings across the Euro area amid a broadly stronger greenback and looming Greece concerns.
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