Gold Technical Update

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XAU/USD 1H Chart , 10:38AM EDT 6/14/2012


Gold has been in a bullish mode since last Friday, June 8. It continues to make higher highs and higher lows, held above a rising trendline. During the 6/13 and 6/14 US session, US data came out and gave gold a boost. The 6/13 retail sales and PPI data showed worsening economic activity and contained inflation. The 6/14 jobless claims and CPI data showed worsening employment conditions, and also curtailed inflation.

These data combine to raise the scope for QE. The FOMC will meet next Wednesday (6/20) to discuss monetary policy.

However, after today's push above the intra-session high, Gold fell sharply. The 1H chart shows a strong bearish candle, which enguled much of the Asian-Eruopean session price action and returned to the level before the 6/13 US data release. The RSI shows an extended bearish divergence, suggesting a lost of bullish momentum.

Will gold top off? If it closes below 1610, there is a good possibility, because this would break below the 200-hour simple moving average as well as a rising trendline. Then the 1600 handle is a key level to monitor before opening up a common pivot near 1585 and some common lows in the 1560's.

1641 is last week's high and is the next key level if the market does not fall below 1610 and instead pushes back above the 1623.45 level.

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist 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.