XAU/USD pair – Daily Chart
Gold prices in terms of US dollar (XAU/USD) witnessed a sharp sell-off and dropped nearly $20 intraday, finally settling Tuesday near lows at 1209.38. The pair was sold-off from 1224.66 highs after the US dollar extended its upward streak across the board following upbeat US house starts and building permits data. XAU/USD reached lows 1205.73, having breached the major supports of 200-DMA and 100-DMA.
Currently, XAU/USD manages to fight back lost ground somewhat, recovering from lows of 1203.27 and trades near highs around 1210 levels. The upside in XAU/USD remains capped by a strong 100-DMA support-turned resistance located at 1212.50 levels. While broad based USD strength also keeps a lid on the prices. The daily RSI at 54 has turned flattish suggesting lack of clear direction await ahead of the Fed minutes from its most recent meeting, due to be published later in the day. Meanwhile, markets believe the document will read more dovish, with no conclusive hints provided on the timing of the rate-hike, which may provide some support to the gold bulls.
On the daily chart, the pair finds good support at 10-DMA located at 1205 levels. Hence, the pair may drop from current levels and retest 10-DMA. A break below the last the pair could drop further to test 20-DMA support placed at 1199 levels. On the other hand, the pair could rise from current levels and retest 100-DMA resistance beyond a break of daily highs at 1210.78. XAU/USD could climb further if the Fed minutes come out more dovish and breach 200-DMA support-turned resistance located at 1216. A break above the last, XAU bulls will take over driving the pair to 1224.66 (May 19 high) levels. Hence, the Fed minutes are likely to shape up further direction for the XAU/USD pair.
XAU/EUR pair – Daily Chart
As anticipated, gold prices in terms of Euro (XAU/EUR) pierced through the 100-DMA located at 1085.55 and reached highs at 1092.17, although failed to breach the 50-DMA placed at 1093.50. The pair faced rejection and rebounded lower to finally end Tuesday higher at 1085. 40 levels clinging to 100-DMA. The pair remained lifted all through the day on the back of broad euro weakness following ECB’s QE front-loading comments and looming Greece concerns.
At the moment, the pair trades higher at 1088.15, retracing from session highs of 1090.30. The pair faces strong resistance at 50-DMA located at 1093.30 and retraced from higher levels, still holding above the 100-DMA support located at 1086.65. The pair remains underpinned as the shared currency remains undermined ahead of the FOMC minutes due later in the US session. The daily RSI aims higher and indicates further room for upside. More so, the pair trades in a symmetrical triangle formation and is on the verge of a bullish breakout once it breaches the crucial 50-DMA. A dovish Fed minutes may drag the US dollar lower, boosting XAU bulls across the board. This may provide the much needed impetus to XAU/EUR and the pair may eventually give a bullish breakout and extends towards 1100 – psychological levels and beyond.
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