Gold backs off from 10-week high, 100-day EMA is the level to beat for the bulls

Gold is flashing red in Asia, possibly due to an uptick in the US equity index futures.
The oversold safe haven found love this week as the sell-off in the US equities triggered a flight to safety.
Technically speaking, the metal's bull breakout would gain more credence above the 100-day exponential moving average (EMA).

Omkar Godbole FXStreet Contributor

Gold is losing altitude in Asia, having clocked a ten-week high of $1,226 yesterday.

At press time, the safe haven yellow metal is trading at $1,218/z, representing a 0.20 percent drop on the day. The pullback from $1,226 to $1,218 could be associated with the overbought conditions reported by the hourly chart and 4-hour chart relative strength index (RSI).

Further, the 0.6 percent rise in the S&P 500 futures in Asia may have calmed market nerves and put brakes on the rally in the yellow metal.

Focus on the 100-day EMA

The metal jumped above the Aug. 28 high of $1,214, courtesy of risk aversion in the Us stock markets, confirming a bullish breakout, however, the subsequent failure to take out the 100-day EMA has established the key EMA as a level to beat for the bulls.

The moving average resistance would be scaled if the equity markets continue to lose ground in the days ahead.

Gold Technical Levels

Resistance: $1,226 (100-day EMA), $1,238 (38.2% Fib R of April/Aug drop), $1,251 (200-day EMA)

Support: $1,214 (Aug. 28 high), $1,200 (psychological support), $1,191 (previous day's low)

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.