Key Highlights
- Gold price declined heavily and traded towards $1,210 before correcting higher against the US Dollar.
- There was a break above a major bearish trend line with resistance near $1,228 on the 4-hours chart of XAU/USD.
- The US New Home Sales in June 2018 decreased 5.3% (MoM), more than the forecast of -2.8%.
- Today in the US, the Initial Jobless Claims will be released, which is forecasted to increase from 207K to 215K.
Gold Price Technical Analysis
There were heavy declines in gold price during the past few days below $1,240 against the US Dollar. The price traded below the $1,230 and $1,220 support levels before it found support near $1,210.
The 4-hour chart of XAU/USD indicates that the price traded as low as $1,211 before buyers appeared. Later, the price started an upward correction and moved above the 50% Fib retracement level of the last decline from the $1,244 high to $1,211 low.
Moreover, there was a break above a major bearish trend line with resistance near $1,228 on the same chart. The price is currently showing a few positive signs above the $1,220 level.
However, there are many hurdles on the upside near the $1,240 level, which was a support earlier. It now coincides with the 76.4% Fib retracement level of the last decline from the $1,244 high to $1,211 low.
Only a close above the $1,240 level could open the doors for a larger recovery in gold in the near term. If not, the price may resume its decline once the current correction is over.
Recently in the US, the number of New Home Sales in June 2018 was released by the US Census Bureau. The market was looking for a decline of 2.8% in sales compared with the previous month.
However, the result was below the market forecast, as there was a decline of 5.3% in the US New Home Sales. Moreover, the last reading was also revised down from +6.7% to +3.9%.
The US Dollar was under pressure after the release, and pairs like EUR/USD and GBP/USD moved higher. Gold price also moved higher and traded towards $1,234.
Economic Releases to Watch Today
- Germany’s GfK Consumer Confidence for August 2018 – Forecast 10.7, versus 10.7 previous.
- ECB Interest Rate Decision – Forecast 0%, versus 0% previous.
- US Initial Jobless Claims – Forecast 215K, versus 207K previous.
- US Durable Goods Orders for June 2018 – Forecast +3.0% versus -0.6% previous.
