Gold price extended its downside move against the US Dollar, and it looks like XAU/USD may break $1200 for further declines in the near term.
Gold Price Weekly Analysis – More Declines Likely
· Gold price faced a lot of sellers lately and moved below the $1230 level against the US Dollar.
· There is a major resistance formed on the upside at $1230, acting as a barrier.
· The US Consumer Price Index released by the US Bureau of Labor Statistics recently posted an increase of 0.4% in Oct 2016.
Gold Price Technical Analysis
There was an increase in the bearish pressure on Gold price as mentioned in the last analysis. The price moved down below a couple of support levels, including $1240 and $1230 against the US Dollar. It looks like the price may extend the current downside move in the near term.
On the upside, the broke support at $1230 is currently acting as a resistance along with a bearish trend line formed on the 4-hours chart of XAU/USD. Moreover, the 23.6% Fib retracement level of the last decline from the $1337 high to $1205 low is also around the highlighted resistance area at $1230.
It looks like gold price may decline further. A break below $1205 may open the doors for a test of $1200. If sellers remain in control, there is even a chance of a break of the $1200 support.
Trade Idea – If you are looking to enter a sell trade, then consider it on rallies near the highlighted resistance area with a stop of a close above it.
Recently, the US saw a major release of the Consumer Price Index by the US Bureau of Labor Statistics. The market was poised for a rise of 0.3%, but the outcome was positive, as there was an increase of 0.4% in Oct 2016, compared with Sep 2016.
The report stated that “The energy index increased 3.5 percent, its largest advance since February 2013. The indexes for fuel oil and gasoline were up 5.9 percent and 7.0 percent, respectively, while the indexes for electricity and natural gas saw relatively smaller increases of 0.4 percent and 0.9 percent.“
Overall, the bearish pressure on Gold price is here to stay, and there can be more declines in the near term.