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Gold (XAU/USD) fails to resist above the $1850 level once again, as sellers return in early European trading.
Despite the latest leg down, gold prices remain in a familiar range of around $1840-45 levels, awaiting fresh impetus from the US economic data.
The US dollar clings onto its recovery gains across its main rivals, as the risk-off action in the US stock futures weighs on the market mood amid ongoing Wall Street speculative trades and vaccine concerns.
From a technical perspective, the XAU bears remain hopeful so long as the price makes a sustained move above the critical 200-daily moving average (DMA), now at $1851.
Gold bulls have failed to find acceptance above the latter over the past six trading sessions, leaving the downside risks intact in the metal.
Therefore, Thursday’s low of $1834 could be challenged en route the January 13 low at $1803. The Relative Strength Index (RSI) edges higher but remains the midline, backing the case for the sellers.
24-hour view: “We highlighted yesterday USD ‘could move above the month-to-date high near 104.40’. We added, ‘a rise beyond 104.75 is unlikely’. Our view was not wrong as USD eased from 104.46 and closed at 104.21. USD rose sharply after opening this morning and the rapid pick-up in momentum suggests that USD could strengthen further but the odds for sustained advance above 104.75 are not high. For today, the next resistance at 105.00 is unlikely to come into the picture. Support is at 104.25 followed by 104.00.”
Next 1-3 weeks: “There is not much to add to our update from yesterday (28 Jan, spot at 104.25). As highlighted, ‘risk for USD has shifted to the upside but the solid resistance at 104.75 may not yield so easily’. The positive outlook is deemed intact as long as USD does not move below 103.75 (‘strong support’ level was at 103.50 yesterday). Looking ahead, the next resistance above 104.75 is at 105.00.”
24-hour view: “We highlighted yesterday that ‘the bias remains on the downside even though 1.2050 is a solid support and may not be easy to crack’. However, EUR recovered quickly after touching a low of 1.2079 (high has been 1.2141). Downward pressure has eased and for today, EUR is likely to trade sideways, expected to be within a 1.2085/1.2150 range.”
Next 1-3 weeks: “We have held the same view since last Friday (22 Jan, spot at 1.2165) where we expect EUR to ‘trade between 1.2080 and 1.2250 for a period of time’. Since then, EUR has traded mostly sideways but it dropped sharply to 1.2056 yesterday. Shorter-term downward momentum is improving and the risk is shifting to the downside. That said, EUR has to close below 1.2050 before a sustained decline can be expected. The odds for such a move are quite high unless EUR moves above 1.2180 within these few days. Looking ahead, the next support below 1.2050 is at 1.2000.”
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