Key Highlights
- Gold price is in a monster uptrend and it recently traded above the $1,360 level against the US Dollar.
- It seems like a short-term correction is underway with a break of a bullish trend line with support at $1,350 on the daily chart of XAU/USD.
- The US ADP Employment Change in January 2018 was 234K, more than the forecast of 185K.
- The Fed interest rate decision was announced yesterday in which the central bank kept rates at 1.50%.
Gold Price Technical Analysis
There were a lot of bullish moves in Gold price during the past few weeks as it traded above the $1,300 and $1,350 resistance levels. At the moment, the price is likely correcting lower and it may test the $1,330 and $1,320 support levels.
Looking at the daily chart of XAU/USD, there are many green candles visible, suggesting a solid uptrend from the $1,236 low. The price gained a lot of bids and recently traded as high as $1,366.
However, it seems like there is a short-term top carving from the $1,366 level. There was a break below a bullish trend line with support at $1,350 on the daily chart. The price tested the 23.6% Fib retracement level of the last leg from the $1,236 low to $1,366 high at $1,355.
Should buyers fail to hold the $1,335 support level, there is a chance of further declines in the short term. The next major support is around the $1,300 handle. The mentioned $1,300 support also coincides with the 50% Fib retracement level of the last leg from the $1,236 low to $1,366 high.
Therefore, $1,300 support level can be considered as a pivot level and a strong buy zone. On the flip side, if the price resumes its uptrend, it could easily retest the last swing high of $1,366.
US ADP Employment Change and Fed Interest Rate Decision
Recently, the US saw two important releases. First, the ADP Employment Change was published by the Automatic Data Processing, Inc. for Jan 2018. The market was looking for a change of 185K.
The actual was much better as the change in the ADP Employment was 234K in Jan 2018. However, this was a bit less than the last revised reading of 242K.
The second and the most important release was the Fed interest rate decision. The central bank decided to keep interest rates at 1.50%. There was no major impact on the market and pairs like EUR/USD and GBP/USD remained in the bullish zone.
On the other hand, the USD/JPY pair seems to be forming a support base above 108.50 and is currently preparing for an upside correction.
