- Dollar clings onto the bounce amid improved US economic recovery.
- Technical outlook favors XAU/USD bears in the short-term.
- Any bounce in gold to remain shallow ahead of US ISM Services.
Gold (XAU/USD) sold-off aggressively amid the ongoing broad-based US dollar comeback on Wednesday and finished the day at $1942, having booked a 1.5% loss. The US dollar extended its profit-taking rally after upbeat US Factory Orders bolstered the optimism over the improved economic recovery, triggered by stronger US ISM Manufacturing PMI. Further, the sell-off in the euro on the European Central Bank’s (ECB) jawboning the exchange rate value also aided the recovery in the dollar from two-year troughs. Additionally, Wall Street’s record-breaking rally on US fiscal stimulus hopes and economic optimism also weighed on the safe-haven gold.
So far this Thursday’s trading, gold attempted a pullback from three-day lows but the bounce appeared shallow, as the dollar held onto the overnight gains. All eyes now remain on the US Jobless Claims and ISM Services PMI data for a fresh direction in the yellow metal. In the meantime, ‘sell the bounce’ trading could remain in play, as the technical outlook appears bearish in the near-term.
Gold: Hourly chart
Short-term technical perspective
On the hourly chart, gold is on the verge of a bear flag breakdown, as it is testing the rising trendline support at $1944.
An hourly closing below the latter will confirm the bearish breakdown, opening floors for a test of last week’s of $1903. The bulls, however, could be offered some temporary respite near Wednesday’s low of $1932.72. The next relevant cushion comes in around the $1925 region, last Friday’s low.
Should the price manage to resist above the latter, a bounce-back towards the robust support now resistance at $1944 will be on the cards. The buyers will then aim for the key $1950 barrier, the convergence of the horizontal 200-hourly Simple Moving Average (HMA) and bearish 21-HMA. The hourly Relative Strength Index (RSI) points south while below the midline, suggesting more scope to the downside.
Gold: Additional levels to consider
|Today last price||1944.98|
|Today Daily Change||2.82|
|Today Daily Change %||0.15|
|Today daily open||1942.16|
|Previous Daily High||1973.34|
|Previous Daily Low||1932.73|
|Previous Weekly High||1976.79|
|Previous Weekly Low||1902.76|
|Previous Monthly High||2075.32|
|Previous Monthly Low||1863.24|
|Daily Fibonacci 38.2%||1948.24|
|Daily Fibonacci 61.8%||1957.83|
|Daily Pivot Point S1||1925.48|
|Daily Pivot Point S2||1908.8|
|Daily Pivot Point S3||1884.87|
|Daily Pivot Point R1||1966.09|
|Daily Pivot Point R2||1990.02|
|Daily Pivot Point R3||2006.7|
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