Gold: recovery limited by $1270, drops to test yesterday’s low

  • Bearish tone prevails as USD strengthens.
  • Price near $1260, testing yesterday’s low. 

Gold turned to the downside during the US session amid a rally of the US dollar across the board. The metal approached yesterday’s low. It bottomed at $1,262.50/oz and it was hovering near the lows, holding a bearish tone. 

At the same time, the greenback gained strength. The Dollar Index reached at 93.56, the highest level in two weeks. The DXY is consolidating on top of the 93.35 area that capped the upside several times during the last two weeks. 

The greenback has been moving with a bullish tone since the beginning of the week. Today’s ADP report offered support to the outlook by confirming that the US labor market remains solid. showed that the private sector added 190K jobs in November, in line with expectations. 

On the flip side, the bearish tone in gold prevails and the pressure could increase with a slide below $1260. The main risks from a fundamental perspective are rising tensions with North Korea, new developments with the Russian interference in 2016 elections and problems with the tax reform at the US Congress. 

XAU/USD Levels to watch 

The metal is testing the $1260 area that is critical. A break lower would see the lowest price since early August and would clear the way for $1250, the next strong support. If it manages to hold above $1260 it could build a base for a recovery. The immediate resistance might be seen at $1270 (Nov 30, Dec 4 low), followed by $1277 (Dec 4, 5 high) and $1285 (Nov 30). 
 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

RELATED TOPICS