XAU/USD pair – Daily Chart
Gold prices in terms of US dollar (XAU/USD) witnessed a massive sell-off on Thursday, dropping nearly $ 30 and retested fresh weekly lows at 1176.93. XAU/USD dropped from $ 1207 highs, breaking below all the moving averages as traders unwound their gold longs on month ending while upbeat US jobless claims, PCE inflation and Chicago PMI numbers lifted the greenback from two-months trough, dragging XAU/USD lower to settle at 1184.50.
Currently, XAU/USD has formed ascending triangle formation on the daily chart and wavers around the triangle support located at 1181.20. The pair failed to sustain at higher levels at 1185.31 and languishes near lows as the broad US dollar strength continues to dominate amid a data-light European session. Meanwhile, traders prefer to hold the reserve currency following upbeat US macro data released yesterday and also ahead of the major US data flow due later in the session. Stronger greenback makes gold expensive for the holders of the yellow metal in foreign currency.
Further on the daily chart, RSI at 44 aims lower below the mid lines indicating further rooms for decline. The pair may also display an ascending triangle break out on the downside if the US dollar resumes its upward moves on the upcoming data releases. To the downside, the pair may test the daily lows at 1180.58 and could extend decline to the next support at 1175 below a break of this last. Trading volumes are expected to be thin as Europe remains closed on Labour Day, which may limit gains and losses in the pair. To the upside, the pair faces stiff resistance at 50-DMA located at 1191.50 levels and beyond that it could test 5-DMA located around 1195 levels. Overall, XAU/USD is poised for a break down and extend losses as broad USD strength is likely to persist.
XAU/JPY pair – Daily Chart
Gold prices in terms of Japanese yen (XAU/JPY) failed to breach the crucial resistance at 143,500 levels and slipped back lower to finish Thursday at 141,525 levels. The XAU/JPY pair was relentlessly offered yesterday, despite yen weakness later in the US session, as reversal in the US dollar supported by above estimates US economic data boosted risk-on moods, hurting gold’s appeal as a safer bet. However, the pair remained well supported above the trend line support at 140,125 after getting rejected near 20-DMA.
Currently, XAU/JPY trades lifted near highs around 141,700 levels largely on yen weakness versus the US dollar as the greenback continues to ride higher on the latest impressive set of US data. The pair has formed a small doji on daily chart indicating that markets await the upcoming US macro releases for further cues on the USD moves. The technical indicator in RSI stands flat 45 backing the case for a wait and watch mode within the markets. However, the upside breakout in the pair looks like a more likely bet given the latest weak inflation print from Japan which is expected to keep the yen undermined while upbeat data-backed strength may further boost the USD bulls.
To the upside, the pair may edge higher and retest 5-DMA located at 142,681, beyond a sustained break above 142k barrier. However, the gains may remain capped as broad USD strength may weigh on safe havens like gold as mentioned earlier. To the downside, XAU/JPY may test previous lows at 140,600 levels and may drop further to the trend line support at 140,180 levels below a break of the last. Overall, a generalized intraday upside bias persists so long as 141k handle holds.
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