- A stronger US dollar pushed gold prices further to the downside during the US session.
- XAU/USD still on track for highest weekly close since July.
Gold rose earlier today to test monthly highs near $1,240/oz but lost strength and pulled back. The retreat from the top, continued after the ECB meeting and during the American session, amid a stronger US dollar against majors and despite an improvement in risk appetite.
The metal bottomed recently at $1,228 and as of writing was hovering around $1,230, down $3 for the day, but still up for the week and holding a bullish tone. The rally that started fifteen days ago, in order to continue, needs to see a breakout above $1,240.
Technical outlook
“The daily decline has left the metal barely up for the week, but retains its bullish stance in the daily chart, as spot gold continues developing above its 20 and 100 DMA, with the shortest advancing above the larger one”, says Valeria Bednarik, Chief Analyst at FXStreet. She adds that the Momentum indicator is advancing into overbought levels, while the RSI continues consolidating around 60.
Ahead of the Asian session, the 4 hours chart shows the metal poised to extend its decline, now trading below a flat 20 SMA and as technical indicators head sharply lower, challenging their midlines straight from overbought readings, explains Bednarik.
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