Visit our website – Ikofx
The US dollar was seen weakening against a few major currencies recently, including the Euro and the British pound. However, GOLD on the other hand traded lower and tested the $1205 support area in the near term. There was a sharp downside reaction noted in GOLD, which pushed it lower. There is a major release lined up later today, as the FOMC meeting minutes will be published. And, as we all know that the FOMC meeting minutes always create volatility in GOLD we can witness action this time too. Moreover, the US Industrial Production will also be released by the Board of Governors of the Federal Reserve. The forecast is of a 0.3% gain in January 2015. So, let’s see how it trades in the coming sessions.
There was a monster bullish trend line formed on the hourly chart of GOLD, which was broken recently by sellers. It not only broke the trend line, but also cleared the 100 hour simple moving average. This can be considered as a bearish sign for the pair in the near term. After the slide, it managed to find support around the $1205 level, which acted as a hurdle for the pair. GOLD is now correcting higher, but upside might be limited as the 38.2% fib level of the last leg from the $1236 high might come into play.
On the downside, the $1200-05 area holds the key in the short term. A break below the same might take GOLD towards $1180 level.
Overall, one might consider selling rallies in GOLD as long as it is trading below the $1220 level.