The US dollar traded lower to some extent against most major currencies, including the Aussie dollar and the Euro. GOLD was also not far behind. It was seen trading lower ahead of the Yellen speech, but soon after her speech it recovered ground and traded higher. GOLD buyers managed to clear an important resistance area, which means there is a chance of more gains in the near term. The Fed’s Yellen is also scheduled for her second speech today. So, let’s see how the dollar trades in the coming sessions. Moreover, the number of new home sales will be released by the US Census Bureau. The market is expecting a decline in January 2015, which if fulfilled might help GOLD.
There was a monster bearish trend line formed on the hourly chart of GOLD, which was cleared recently by buyers. Currently, GOLD is heading towards the 50% fib retracement level of the last leg from the $1236 high to $1188 low. The mentioned fib level holds a lot of importance in the near term, as the 200 hour moving average is also sitting around the same area. So, there is a chance of a correction in the short term, which might find support around the 100 hour MA. Moreover, the broken trend line might also act as a support moving ahead.
A break above the 200 hour MA could ignite sharp gains in GOLD, which could take it towards the $1220 resistance area where sellers might appear.
Overall, one might consider buying dips in GOLD as long as it is trading above the 100 hour MA.
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Posted By Simon Ji of IKOFX Technical Team: Online Forex Broker
Website: http://ikofx.com/
In this week’s podcast, we cover Questions for traders, State of Fed, Greek crisis, oil, gold and GBP
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