- A new lower low triggers a deeper decline.
- US data could bring some action.
- A breakout from the upper channel signaled a new leg down.
The price of gold has declined and is trading at $2027 at the time of writing. The rally in the US dollar weighed on the precious metal. The yellow metal fell even as the US reported poor economic data.
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Durable goods orders, core durable goods orders, Richmond manufacturing index and CB consumer confidence were worse than expected in the last session. Also today, the Australian Consumer Price Index rose 3.4%, although analysts were expecting a 3.6% rise.
In addition, the RBNZ left the official cash rate at 5.50%, as expected. Later, economic figures from the United States should shake up the markets.
Prelim GDP is expected to report 3.3% growth, Prelim GDP Price Index may reveal 1.5% growth, Merchandise Trade Balance could fall to -88.4B, while Prelim Wholesale Inventories should result in growth of 0.1%.
Positive economic data may help the dollar appreciate and may push KSAU/USD to new lows. Only bad data should help gold reach new highs.
Technical analysis of the price of gold: the leg down
KSAU/USD climbed to $2041, where it encountered resistance. It broke out of an upward channel pattern (flag formation), signaling a new downward leg.
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Price could move back down to test support levels, trying to accumulate new bullish energy before jumping higher.
The weekly pivot point of $2025 paused the selloff, and is now trying to rally and recover. The fake failure heralded exhausted sellers. So, only a new lower low could trigger a significant move down.
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