Gold’s price is prone to geopolitical risks and the U.S. dollar’s value. After a robust rally to the upside, adding 7.3% between July 10th and August 11th, the precious metal topped near $1,292 and turned sharply to the downside. The upside rally came from the dollar’s weakness and the traders’ preference to commodities amid tensions between U.S. and North Korea. In the last couple of days, the geopolitical tensions between the two countries seem to have calmed down, and the strong economic data from the U.S. boosted the greenback. Retail sales had the biggest increase in seven months in July, expanding by 0.6% versus expectations of 0.4%.
Moreover, June’s print revised upside to 0.3% from a decline of 0.1% before. Later today, FOMC minutes will be released and we would expect traders to watch them closely in order to figure out when Fed will tighten the monetary policy again.
XAU/USD – Technical Outlook
The precious metal completed the third straight bearish day and sank more than 1.4% this week, following the rebound on the $1,292 resistance level. On a weekly basis, the price seems to be trading within a consolidation area within the $1,207 support handle and the $1,292 resistance level.
The technical structure suggests a bearish bias, as the indicators are sloping down on the daily chart. The RSI indicator is sloping to the downside after it met the overbought zone in the previous week, whilst the MACD oscillator is weakening, ready to post a bearish crossover with its trigger line. Moreover, going to the medium-term chart, the three simple moving averages (50, 100 and 200) are squeezing, and all of them are approaching the $1,233 support barrier, which overlaps with the 50-month SMA. Our forecast is a hit of the immediate support at $1,260.
Analysis by JFD Brokers