Gold prints 8-day high as dollar index hit 2.5-month low
- Gold is reporting gains for a third straight day, courtesy of weak tone in the US dollar.
- A break above $1,212 would confirm a resumption of the rally from August lows.
Gold clocked an eight-day high of $1,210 earlier today likely due to a sharp drop in the greenback.
China's measured response to new US tariffs earlier this week triggered hopes that a further escalation of trade war could be avoided.
As a result, the riskier assets picked up a bid and the US dollar exchange rate, as represented by the dollar index (DXY), suffered a head-and-shoulders breakdown on Tuesday.
Further, in accordance with the bearish technical development, the DXY fell to 93.83 yesterday – the lowest level since July 9 – pushing the yellow metal above its 50-day moving average (MA).
Looking forward, the corrective rally from the recent low of $1,160 could resume if gold finds acceptance above $1,212 (top end of the channel pattern).
Gold Technical Levels
Resistance: $1,212 (channel resistance), $1,214.30 (Aug. 28 high), $1,217 (Aug. 10 high)
Support: $1,206 (50-day MA), $1,203 (5-day MA), $1,200 (psychological level)
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
