Gold Halts Downside Movement As Bulls Gain Momentum

Gold finally showed a moderate pullback near the $1232 support area, apparently leaving a potential bullish pin bar on the daily chart that would be considered a major sign for the bullish reversal although the bias has already been turned to bearish due to Lower Low in the recent correction wave.

Technical Analysis

As of this writing, the precious metal is being traded around $1235. A support may be seen near $1232, the intraday low of today ahead of $1200, the psychological number and then $1180 which is a monster support in short to medium term.

gold fxopen

On the upside, the yellow metal is expected to face a hurdle near $1258 an ounce, the 23.6% fib level ahead of $1275, the 38.2% fib level and then $1285, the 200 Daily Simple Moving Average (DSMA) as shown in the above chart. The bias will remain bearish as far as the $1344 resistance area is intact.

US Monthly Budget Statement

The trade deficit of the United States remained $-129billion in August as compared to $-95billion in the month before, exceeding the median projection of $-130billion. Generally speaking, higher trade deficit readings are considered negative for the US economy thus a better than expected actual outcome spurred renewed selling pressure in the price of gold.

US Retail Sales

The Census Bureau of the US will release the retail sales report on Friday (today) in the New York session. According to the median projection of different economists, the retail sales remained 0.6% in August as compared to 0.0% in the month before. Generally speaking, higher retail sales figures are seen as positive for the US economy thus a better than anticipated actual reading will be seen as bearish for gold and vice versa.

Conclusion

Considering the overall technical and fundamental outlook, buying the precious around the current levels appears to be a good strategy if we see a bullish pin bar or bullish engulfing candle on the daily chart today.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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