• 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
Daily SMA20 1962.01
Daily SMA50 1896.66
Daily SMA100 1808.04
Daily SMA200 1686.09
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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