Key Highlights
- Gold price found support near $1,815 after a sharp decline from $1,960.
- The price could face a strong resistance near $1,900 if it corrects higher.
- GBP/USD climbed higher and revisited the 1.3700 resistance zone.
- The US CPI increased 1.4% in Dec 2020 (YoY), better than the market forecast of 1.3%.
Gold Price Technical Analysis
After trading as high as $1,959, gold price started a fresh decline against the US Dollar. The price broke a major support zone near $1,900 to move into a bearish zone.
The 4-hours chart of XAU/USD indicates that the price declined below a major bullish trend line at $1,905 to start the recent drop. The price even broke the $1,850 support level and settled well below the 100 simple moving average (red, 4-hours).
It even broke the 200 simple moving average (green, 4-hours) before it found support near the $1,815 level. It traded as low as $1,816 and it seems like the price is forming a base above $1,820.
The price is current recovering, but it is facing a lot of hurdles near $1,870. The first major resistance is near the $1,888 level and 100 simple moving average (red, 4-hours). The main resistance is now forming near the $1,900 level (a multi-touch zone).
On the downside, the $1,820 and $1,815 levels are important supports. A close below $1,815 might even push the price below the $1,800 level.
Fundamentally, the US Consumer Price Index for Dec 2020 was released yesterday by the US Bureau of Labor Statistics. The market was looking for a 1.3% rise in the CPI compared with the same month a year ago.
The actual result was better than the forecast, as the US Consumer Price Index increased 1.4%. Looking at the monthly change, there was a 0.4% increase in the CPI, up from the last 0.2%.
The report added:
The index for all items less food and energy increased 0.1 percent in December after rising 0.2 percent in the previous month. The indexes for apparel, motor vehicle insurance, new vehicles, personal care, and household furnishings and operations all rose in December.
Overall, gold price could face resistance near $1,900 if it corrects higher. Looking at EUR/USD, the pair is struggling to clear the 1.2240 resistance, while GBP/USD climbed again towards the 1.3700 resistance.
Economic Releases to Watch Today
- US Initial Jobless Claims – Forecast 780K, versus 787K previous.
- Fed’s Chair Powell speech.
