Gold dropped sharply in the morning and reached the 1269 level, but the buyers have stepped in again and have forced the rate to increase as much as $1282 per ounce. Price remains under pressure on the Daily chart because is still located below some important resistance levels (support turned into resistance). Price increased only because the USD is weak on the short term as the USDX slips lower and could hit new lows in the upcoming days.
The yellow metal move in range on the short term, but I really hope that we’ll have a clear direction very soon and a trading opportunity. Gold increased in the second part of the day as the Aussie has managed to appreciate a little versus the greenback.
The Aussie dropped in the morning because the Australian and the Chinese data failed to impress. The Australian NAB Business Confidence remains steady at 8 points. Unfortunately, the Chinese Industrial Production increased only by 6.2%, less compared to the 6.3% estimate and versus the 6.6% growth in the former reading period, while the Retail Sales increased only by 10.0%, less compared to the 10.5% estimate. The Chinese Fixed Asset Investment was reported at 7.3%, matching expectations, while the Foreign Direct Investment increased by 1.9%, beating the 1.6% in the former reading period.
Gold made a false breakout above the sliding line (SL), above the 50% retracement level and above the long term 38.2% retracement level signaling that we may have another decrease. Price has come back to retest the mentioned resistance levels, a rejection from here will force the price to drop at least till the 61.8% retracement level which represents the near term downside target.
Gold failed to reach the WL1 of the major descending pitchfork signaling an exhaustion, but it could still reach this line if will move sideways in the upcoming days. Technically, a rebound was expected after the failure to reach and retest the median line (ml) of the minor descending pitchfork.