Gold Analysis: XAU/USD supported at $ 1200, awaits US CPI

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) swung between gains and losses on Thursday, finally settling the day lower at 1205.90. The pair dropped yesterday from 1212.82 highs despite broad USD weakness following weak US macro data releases and almost tested 1200 levels, printing lows near 1201 levels. However, the price held above the psychological level of 1200 as the Fed minutes and the latest soft economic indicators hinted at a prolonged period of low interest rates.

Currently, XAU/USD trades near highs around 1208 levels, attempting a bounce to breach 10-DMA located at 1209.25. The pair edged higher today amid persistent US dollar weakness across the board ahead of crucial US CPI figures and Fed Chair Yellen’s speech due later in the NA session. The daily RSI has ticked slightly higher indicating further upside bias persists. To the upside, the pair is likely to test the 5-DMA and 100-DMA confluence around 1211.70-1212.80 zone. A break beyond the last resistance zone, the pair may edge higher to 200-DMA upside barrier located at 1214.80. A worse than expected US CPI print may boost the XAU bulls, thereon, taking the pair to 1225 levels. In case the CPI figures beat markets expectations, USD bulls will jump back into the bids dragging the pair below 1200 – psychological levels.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) snapped its three-day rally and ended in red on Thursday at 1085.51 levels, failing yet another attempt to sustain above the trend line resistance of 1090 levels. XAU/EUR weakened yesterday largely on the back of rising euro versus the greenback following downbeat US fundamentals. However, the pair bounced-off lows near 1080 and rebounded higher to close the day above 5-DMA located at 1082.04.

At the moment, the pair remains near lows around 1083 levels, pressured by persistent strength seen in the shared currency versus the US dollar as markets await ECB Chief Draghi’s speech and anticipate pro-EUR comments from the Central banker which may boost the single currency further. The daily RSI languishes on the mid lines, aiming lower, which indicates the pair could drop further to test the trend line support located at 1079.20 levels. With further gains in the euro on Draghi’s comments, the pair may break below the last and extend declines to 1075.90 – 10-DMA support, below which floors would open for a test of 20-DMA located at 1073. The upside seems limited and remains capped by 5-DMA around 1086 levels.

XAU/JPY pair – Daily Chart

Gold prices in terms of Japanese yen (XAU/JPY) extended its side trend for the third straight session on Thursday, settling the day lower at 145,977 levels. The pair edged lower in the previous session as USD/JPY stood resilient around 121 handle despite bearish US data flow. The pair pared initial gains and gave up the 146k barrier at close.

XAU/JPY extends its downside bias today and trades below 146k handle near 145,880. The pair keeps losses as the yen strengthened versus the greenback after Bank of Japan (BOJ) left its monetary policy unchanged while revised Japan’s economic assessment to the upside. At the moment, the pair has formed a small doji on the daily charts with the daily RSI dead flat around 59 levels. Thus, markets seem to be quite divided and await fresh direction from the upcoming US CPI data. As it is widely expected that the US price pressures are likely to have eased to 0.1% in April from 0.2% seen in March, the US dollar may take a hit again dragging USD/JPY lower. Hence, to the downside XAU/JPY may test the strong support zone around 145, 500 levels later today. A break below the last, selling pressure may intensify drowning the pair to 145k handle. To the upside, the pair faces stiff resistance at 5-DMA located at 146,246 levels. A break above the last the pair may climb higher for a retest of solid resistance around 147k barrier.