Gold Technical Update

Previous: Gold - Trade Plan to Sell on a Pullback After the Strongest 1-Day Drop in 2012 (3/1) 

XAU/USD (Gold)


Part of the reason gold has been strong is because quantitative easing and similar monetary actions have essentially raised the supply of fiat currencies reducing their value relative to gold. As gold (XAU/USD) is priced in the greenback, a reduced expectation of QE by the Fed can be a bearish factor. The FOMC statement on 3/13 gave a modestly positive outlook on the economic recovery thus reducing expectation of QE.

Gold fell back to test an important support level. The daily chart shows a ranging market between roughly 1520 and 1802. The central pivot, not necessarily in the the actual middle but rather a common pivot point near the middle, is just above the 1660 handle. A break and hold below 1660 could extend the current bear run down toward 1520-1560 range support area.

Furthermore, if the daily RSI reading falls back below 40, it shows loss of bullish momentum, confirming that the market continues to be sideways instead of bullish.

The 4H chart shows a bearish momentum established in the short-term. The RSI reading failed to break above 60 and a return below 40 confirms maintenance of bearish momentum. This would be good clues to go along with a break below 1660 for the bearish outlook toward 1560.


We'll follow up with the outlook on gold during the Market Intelligence Briefing on Wednesday 3/14 8:00ET.

Don't miss the opportunity to get in on the deep introductory rate offer for Market Intelligence Briefings including a 1-week free trial. Click on the link below to find out more:

Fan Yang CMT is a forex trader, analyst, educator and main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.



Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.