Gold Analysis: XAU/USD could extend to $ 1199

[The Machine]

XAU/USD pair – Daily Chart

 

Gold prices in terms of US dollar (XAU/USD) bounced-off fresh two week lows reached at 1183.56 on Wednesday before ending the day in red at 1187.49. The pair remained supported above the channel trend line support of 1182.50 while the gains were capped below 1191 levels. XAU/USD remained pressured on increased Fed rate hike bets as early as next month. Also one of Fed official’s commented earlier this week that a June rate hike seems possible given the recent strength in the US fundamentals.

XAU/USD trades higher today, although keeping the familiar range between 1185-1191 levels. The pair trades lifted largely on the back of broad USD weakness after traders picked up the shared currency on renewed Greek deal hopes, pushing EUR/USD higher. Moreover, markets now shift their attention towards US weekly jobless claims and pending home sales which are expected to show mixed results, adding further pressure on the USD. Thus, the XAU bulls will benefit from the US economic news.

The same picture is reflected from the technical indicator, the daily RSI hovering around 45 has inched higher indicating further room for upside beyond a break of 1192 levels. A breach of the last, the pair could edge higher to test the 5-DMA resistance located at 1196 levels. However, the upside seems restricted to 20-DMA and 50-DMA confluence around 1199 levels as traders remain wary ahead of US Q1 GDP figures due tomorrow. To the downside, the channel trend line support at 1183 acts as a major downside barrier. Overall, the pair may remain lifted in today’s trade as long as 1183 support holds.

 

XAU/EUR pair – Daily Chart

 

Gold prices in terms of Euro (XAU/EUR) extended losses and finished lower on Wednesday at 1089.71 levels, having recovered from session lows 1086.95. Though the pair witnessed losses yesterday, but the pair managed to hold ground above the trend line resistance-turned support at 1085.75. The pair accelerated losses below the major 100-DMA and 50-DMA largely on the back of a strong rebound seen in EUR/USD on news of prospects of a deal being reached between the Greece and its creditors.

At the moment, XAU/EUR trades lifeless in a slim range with upside capped by 100-DMA located at 1091.60 and the downside cushioned by trend line support located at 1085. The pair is hovering around the 10-DMA placed at 1087.40 and seems poised to test the trend line support. The daily RSI at 51.70 head lower and may surpass the mid lines in to the bear range. Thus the moving averages and the technical indicator points to further southward momentum building up. Hence, a break below the last, selling pressure is expected to scale up dragging the pair to the next support zone at 1080.50-1082 levels. Conversely, only a break above 50-DMA located at 1093.40 may negate short term downward pressures.