On Wednesday, the precious metal gold prices slid to $1,400 level as the U.S. dollar surged around a weekly high on the back of better-than-forecasted retail sales data from the United States, while traders waited for clues on interest rates from the U.S. Federal Reserve.
The greenback was significantly weaker against a basket of six major currencies at 97.325 after growing 0.5% the previous day following a surge in U.S. retail sales figures. The U.S. currency operated near one-week high, driving bears for the yellow metal gold.
If you are following our updates, you may know gold has a negative correlation with the U.S. dollar, which is why we see bearishness in gold over a strong dollar.
XAU/USD – Technical Outlook
In our previous update, Gold’s Symmetric Triangle Pattern Holds, we spoke about the symmetric triangle pattern, which was supporting gold around 1,410 along with resistance at 1,414.
However, the range got violated on the release of better than expected U.S. retail sales data. For the moment, gold prices are consolidating in a sideways trading range of 1,407 – 1,400. Whereas the 20 and 50 periods EMA which previously were providing support are now working as a resistance.
Key Trading Level: 1,414.23
We need to keep an eye on 1,407 resistance as the violation of this level can lead gold towards 1411. On the lower side, a bearish breakout of 1400 may open further room for selling until 1391. All the best!