Gold extended downside movement on Wednesday, dragging the price of precious metal to less than $1310 an ounce following the emergence of two bearish pin bars around the major resistance level. The short term sentiment remains bearish due Lower High in the recent upside rally.
As of this writing, the precious metal is being traded around $1307 an ounce. A hurdle may be noted around $1312, the 38.2% fib level ahead of $1322, the high of the bearish pin bar which emerged on Friday and then $1342, the 23.6% fib level.
On the downside, the metal is expected to find a huge support near $1300, the confluence of 100 Daily Simple Moving Average (DSMA), 55 DSMA and psychological number ahead of $1287, the 50% fib level and then $1262, the 61.8% fib level. The sentiment will remain bearish in the short term as far as the $1322 resistance area is intact.
US Initial Jobless Claims
The US labor department is due to release the jobless claims report on Thursday as usual. According to the average forecast of different economists, the number of people who claimed jobless incentives during the week ended on August 04 remained 290K as compared to 289K in the week before. Generally speaking, higher jobless claims are considered negative for the economy, hence a worse than expected actual outcome will be seen as bullish for the precious metal and vice versa.
The reports regarding attack on Ukraine by Russia are keeping the yellow metal supported around the current levels because the geopolitical crisis raises demand for bullion as safe heaven investment. If the war breaks out, then there are pretty good chances that the precious metal may blast towards the $1400 handle.
Considering the technical outlook, selling the pair around current level appears to be a good strategy in short term as described above.