GOLD dived sharply towards $1195 level recently and managed to gain buyers around the mentioned level. It corrected higher, but failed to move above an important resistance area. The recent price action suggests that GOLD buyers might make one more attempt to take prices above the $1210 level.
It would be interesting to see how GOLD sellers react if it moves higher from the current levels. Later today, the US Services Purchasing Managers Index (PMI) will be released by Markit Economics. The market is expecting the US services PMI to climb from 54.2 to 54.8. Let us see how the outcome shapes and whether it affects GOLD in the near term or not.
There is a major bearish trend line formed on the hourly chart of GOLD, which acted as a hurdle earlier and might continue to stall the upside in the short term. GOLD recently managed to pierce the 200 hour moving average, which can be considered as a positive sign. However, there is a major thing to note as the 100 hour MA is sitting right at the highlighted trend line, which might act as a barrier in the near term. Not only this, the 50% fib retracement level of the last leg from the $1223 high to $1195 low is also around the same area. A break above the same might call for more gains in the near term.
If GOLD moves lower from the current levels, then the $1200 level might act as a support, followed by the recent low of $1195.
Overall, one might consider selling rallies in the GOLD as long as it is trading below the highlighted trend line.
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Posted By Simon Ji of IKOFX Technical Team: Online Forex Broker
Website: http://ikofx.com/
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