Back
4 May 2016
Gold slides further below $1280 ahead of ADP report
After failing to sustain above $1300 mark, Gold bulls continue to lose grip as the precious metal extends its slide below $1280 level.
As the US Dollar witnessed some traction on Tuesday, the metal failed to built on to its recent gains above $1300 mark. Strong USD makes investments in dollar denominated commodities, like gold, less attractive for investors. Hence, any further signs of USD recovery might trigger some near-term corrective move for gold prices.
Moreover, the metal's higher levels were not confirmed by the respective higher reading on a momentum oscillator, RSI, pointing to a bearish divergence. The occurrence of a bearish divergence was the first sign of weakening momentum, which now seems to reflect in the prices.
Traders will now take further cues from the US private sector employment report, ADP report, due for release later during the US session.
Technical levels to watch
From current levels, the metal seems more likely to extend the weakness below $1270 level towards $1267-65 support area. This $1265 support region represents 38.2% Fibonacci retracement level of $1207.64-$1303.77 up-move. Hence, weakness below this support would confirm the bearish divergence and could open room for further near-term corrective move.
Meanwhile on the upside, 23.6% Fibonacci retracement level near $1280-81 zone, seems to act as immediate resistance. Even if the metal clears this immediate resistance any further up-side might continue to confront strong hurdle near its last week's daily closing high level, $1292-93 zone.
As the US Dollar witnessed some traction on Tuesday, the metal failed to built on to its recent gains above $1300 mark. Strong USD makes investments in dollar denominated commodities, like gold, less attractive for investors. Hence, any further signs of USD recovery might trigger some near-term corrective move for gold prices.
Moreover, the metal's higher levels were not confirmed by the respective higher reading on a momentum oscillator, RSI, pointing to a bearish divergence. The occurrence of a bearish divergence was the first sign of weakening momentum, which now seems to reflect in the prices.
Traders will now take further cues from the US private sector employment report, ADP report, due for release later during the US session.
Technical levels to watch
From current levels, the metal seems more likely to extend the weakness below $1270 level towards $1267-65 support area. This $1265 support region represents 38.2% Fibonacci retracement level of $1207.64-$1303.77 up-move. Hence, weakness below this support would confirm the bearish divergence and could open room for further near-term corrective move.
Meanwhile on the upside, 23.6% Fibonacci retracement level near $1280-81 zone, seems to act as immediate resistance. Even if the metal clears this immediate resistance any further up-side might continue to confront strong hurdle near its last week's daily closing high level, $1292-93 zone.