Gold suffers the worst decline in 2 weeks after losing a key level. Move lower was triggered by a stronger US dollar.
The yellow metal dropped sharply today and lost more than $10 from daily highs. Gold bottomed at $1,211.80, the lowest since November 15. From the lows bounced to the upside, but the recovery was capped by $1,215. As of writing, trades at $1,214, headed toward the lowest close in ten days.
Gold broke a 6-day trading range amid a stronger US dollar supported by comments from the Fed’s vice-chair Clarida, who said interest rate hikes are still necessary. Also, comments from US President Trump regarding auto tariffs pushed the greenback to the upside. The DXY rose today to 97.36, the highest level in a week and posted the third daily gain in-a-row.
XAU/USD Technical outlook
According to Valeria Bednarik, Chief Analyst at FXStreet, the break of the 1,220.00 level exacerbated the decline. “In the daily chart, the metal is now below a mild bearish 20 DMA and barely holding above an also negative 100 DMA, as technical indicators remain within negative ground, the Momentum directionless but the RSI resuming its slide, currently at 45 and favoring additional slides ahead”.
In the short term, the 4 hours chart, shows risk skewed to the downside, explains Bednarik, as gold settled below all of its moving averages and while technical indicators gain downward traction within negative levels.
Support levels could be seen at $1,211.85, $1,204.20 and $1,196.25 while on the upside, resistance might be located at $1,221.50, $1,230.10 and $1,239.75.
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