Gold continues to find support near 100-DMA support, focus remains on Yellen’s testimony

Haresh Menghani FXStreet

Gold extended its slide on Wednesday's slide and dropped to nearly two-week lows after strong US economic data.

Data released from the US showed yearly inflation rate surged to the highest rate in four years during January and monthly retail sales recorded a stronger-than-expected growth in January, with an upward revision to gains for December.

Upbeat US economic data, against the backdrop of Fed Chair Janet Yellen's hawkish comments on Tuesday, lifted the key US Dollar Index to four-week highs and weighed on dollar-denominated commodities - like gold.

Moreover, stronger US economic data also triggered a fresh wave of up-move in the US Treasury bond yields, eventually denting demand for the non-yielding yellow metal and collaborated to the downslide during early NA session.

The metal, however, has managed to bounce off 100-day SMA support area and is currently trading around $1222 region as market participants now look forward to the Fed Chair Janet Yellen's second day of testimony and her comments on the central bank's monetary policy outlook.

Live speech – Janet Yellen’s testimony before the House Financial Services Committee

Technical levels to watch

On a sustained weakness below 100-day SMA support near $1217 region, the commodity is likely to head towards $1210 horizontal support before eventually dropping to test $1200 psychological mark support. On the upside, $1227 area now seems to act as immediate resistance, which if cleared could lift the metal back towards $1241 strong hurdle with some intermediate resistance near $$1235 area.

1. R3 1248.02
2. R2 1241.31
3. R1 1234.52
PP 1227.81
1. S1 1221.02
2. S2 1214.31
3. S3 1207.52

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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