Gold jumps to weekly high amid persistent USD weakness

Haresh Menghani FXStreet

Gold gained fresh traction and traded with positive bias for the third consecutive session on Thursday, touching a fresh one-week high during early NA session.

Currently trading around $1239 level, continuation of the greenback's reversal move was seen supporting demand for dollar-denominated commodities - like gold. In fact, the key US Dollar Index, which touched 101.75 (the highest level since January 12 on Wednesday), was down around 0.4% for the day and was placed at daily lows near 100.70 region.

Moreover, the prevalent risk-off, as depicted by negative trading sentiment around equity markets, is further boosting demand for traditional safe-haven assets and collaborating to the metal's bid tone for the third consecutive session.

Next on tap would be the US economic docket, which would be looked upon for short-term trading opportunities during NA session.

Technical outlook

Yuri Papshev, an independent analyst notes, "positive dynamics of the XAU/USD pair is maintained above the level of 1208.00 (EMA200 on 4-hour chart). Fundamental factors (political uncertainty in Europe and the US, the low probability of a rate hike in the US in March) supporting the gold price. Growth may resume when attached above the nearest resistance level of 1235.00 to 1248.00 goals (Fibonacci level of 50%), 1255.00 (EMA200 on the weekly chart), 1276.00 (61.8% Fibonacci level)."

He further writes, "on the daily and 4-hour charts indicators OsMA and Stochastic crossed over to the sellers. Breakdown level of 1225.00 could trigger a further decline in XAU/USD pair. The immediate objective are - the level of 1220.00 (38.2% Fibonacci level of the correction to the wave decline from July 2016). Breakdown level of 1220.00 could trigger a further decline in XAU/USD pair back to the descending channel on the daily chart and a further decline in this channel."

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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