- The rising US dollar keeps gold under pressure.
- Yesterday's long-legged doji established 200-day MA as strong support.
Gold (XAU/USD) is reporting a 0.30 percent decline in Asia as the greenback is solidly bid nears 4.5-month high.
As of writing, the yellow metal is changing hands at $1,312/Oz and the dollar index, which tracks the value of the greenback against major currencies, is hovering 93.20 - the level last seen on Dec. 20.
It is worth noting that the dollar remains bid despite Iran deal fallout and renewal of sanctions against the OPEC's third-largest oil producer. The dollar's resilience could be associated with the speculation that Iran tensions and the resulting oil rally could boost inflation and force the Fed to hike rates at a faster pace.
However, prospects of higher inflation are not helping gold - a classic inflation hedge. That said, the safe haven metal may pick up a bid if the equity markets turn risk-averse on Iran deal fallout.
Further, the metal created a long-legged doji candle on the 200-day MA support yesterday, thus establishing the long-term moving average as a major support level. So, all is not lost for the yellow metal bulls.
Gold Technical Levels
A break below $1,306 (200-day MA) would expose the psychological support of $1,300. A close below that level could trigger an unwinding of the positional longs, leading to a quick-fire drop to 100-week MA is seen at $1,277.
On the higher side, a move above $1,319 (resistance in 4hr chart) would open up upside towards $1,324 (4-hr 100MA) and $1,326 (resistance in 4hr chart).
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