Gold prices are under pressures from a two-prong attack - China and the US dollar. Gold prices ranged between a high and low of 1289 and a low of 1281, supported by daily cloud top, pressured in European trade following Chinese GDP downgrade, supported in North American trade.
Gold prices are being hit from both sides, with demand for the dollar and supply in gold on fears that buying will dry up in Chinese due to an economic slowdown. The Chinese announced a downgrade to their GDP outlook from 6.5% to between a rage of 6.00-6.50% outlook for 2019. There was some upside for markets following additional announcements of stimulus measures such as tax cuts and softer monetary policy, but the underbelly of global growth fears is underpinning the greenback, to some extent.
The greenback was better bid on the day following strong US data that helped the bull's case to the top of the right shoulder of the H&S pattern on the hourly time frame in the DXY - more on the dollar's performance here: DXY strong, en-route to top of hourly H&S to 97.30s
U.S. data:
Analysts at ANZ Bank explained that the dichotomy between manufacturing and services sector data continues; survey reads for manufacturing have been soft, but services data are so far holding up – and were stronger than expected overnight:
"In the US, the ISM non-manufacturing index rose to 59.7, compared with expectations of 57.4. New orders rose strongly to 65.2 from 57.7 – hitting a 13-year high. Export orders also rose sharply, while the backlog of orders firmed. Employment dipped slightly to 55.2 from 57.8. Similarly, the final euro-area services PMI was a touch stronger than expected, at 52.8. That left the February EA composite index at 51.9, up from 51.0 in January. The employment index rose to 53.0 from 52.2. New orders rose, though export orders fell. The UK services PMI for February was also stronger than expected, rising to 51.3 from 50.1 in January."
Gold levels
Gold has been under pressure since dropping below the 23.6% Fibo down at 1302 on the last trading day of last week in an extension of the downside since losing its footing at the 1320 support on the last trading day of last month. While below the channel support of 1306, bears have been looking for an extension to the 38.2% Fibo located at 1,275, with the confluence of the late Jan support area. However, the daily and 4hr stochastics are well oversold and the price has lost momentum to the downside, falling short of the target today, finding support at the daily cloud top. The hourly stochastics are now up to a level that could attract further supply, but still below 80 pointing to consolidation still as the price moves towards the hourly cloud's resistance and Span A.
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