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).

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)

 

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