XAU/USD (gold price in terms of USD) traded volatile on Wednesday, rallying to fresh more than one-week highs at 1253.32 after the new home sales data from the US disappointed markets and added to the dwindling bets of Fed rate hikes this year. The new home sales unexpectedly dived 9.2% to 494,000 in Jan, against a 4.4% drop to 520,000 expected. However, the spike above 1250 levels was quickly faded and the prices dropped to 1226 in the overnight trades, before recovering some ground and closing the day at 1229.50. The late rebound in the oil prices lifted market sentiment somewhat and triggered the retreat in the yellow metal from weekly highs.
As for today’s trade, the gold prices managed to erase early losses and jumped back on the bids, although traded within yesterday’s trading range. Slumping oil prices and China equities crash caused the return of risk aversion on the markets, and further bolstered the safe-haven bids for gold. Looking ahead, all eyes remain on the main risk event for gold today, the US durable goods orders data that is a precursor for Friday’s prelim GDP report. Markets are expecting durable goods orders for January to improve markedly to 2.9% from -5.0% previously, with the ex-transport gauge expected to jump to 0.3% from -1.0% in December. The US data is expected to set further direction on the gold price action.
Technicals – Risk remains to the upside anyway
The daily charts clearly show a bullish picture for the bullion going forward, even if the US durable goods data meet expectations and shows a rebound last month. However, should the data miss estimates big time, the prices are likely to retest yearly highs reached at 1263.36 on Feb 11. Beyond a break of the last, the doors open towards 1280 levels. The pair remains supported above 5-DMA at 1225.05, which is expected to act as the immediate support in case the data comes in stronger than expectations. The next support lies at 1200 – psychological levels, below which the upward sloping 20-DMA at 1194 is located. However, the bias is tilted towards the upside as the 50-DMA is on the verge of surpassing the 200-DMA from below, looking for a bullish crossover. While the daily RSI aims higher in the bullish territory, also supporting northwards moves.
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