Gold Price Weekly Analysis – Risk of Further Downsides

Gold price remained under a bearish pressure vs the US dollar and traded below $1140. Let’s see if it can decline more going forward.

Gold Price Weekly Analysis – Risk of Further Downsides

·         The US Dollar had an upper hand recently, which ignited downsides in Gold price towards $1120.

·         There are a couple of bearish trend lines formed on the 4-hours chart of Gold, which may act as resistance on the upside near $1135 and $1145.

·         Recently in the US, the Gross Domestic Product Annualized was released by the US Bureau of Economic Analysis, which increased 3.5% in Q3 2016.

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Gold Price Technical Analysis

Gold price was under a bearish pressure lately, as it moved below the $1140 support area against the US Dollar. The XAUUSD pair traded as low as $1122 before starting a recovery. The recent recovery in Gold price found sellers just below the 50% Fib retracement level of the last decline from the $1165 high to $1122 low.

Currently, there are a couple of bearish trend lines formed on the 4-hours chart of XAUUSD, which are acting as a resistance near the $1135 and $1145 levels.

Gold Price Dollar XAUUSDH4 23dec16

It looks like as long as the price is below the highlighted trend lines, there are chances of more declines. The price may even test the last swing low of $1122. Only a daily close above $1140 may trigger further gains in the short term.

Trade Idea – If you are looking to enter a sell trade, then consider it near the highlighted trend lines or $1135 with a tight stop.

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Fundamental Analysis

Recently in the US, the Gross Domestic Product reading was released by the US Bureau of Economic Analysis. The market was waiting for a 3.3% rise in the GDP in Q3 2016 (annualized).

However, the result was above the expectation, as there was a rise of 3.5% in the GDP. The report mentioned that “Real gross domestic income (GDI) increased 4.8 percent in the third quarter, compared with an increase of 0.7 percent in the second. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 4.1 percent in the third quarter, compared with an increase of 1.1 percent in the second”.

Overall, Gold price remains at a risk of further declines and may trade close to the $1125 level.

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