Gold Seems Vulnerable after US Building Permit News

Gold inched higher on Wednesday, increasing the price of yellow metal to more than $1260.00 an ounce after some key economic releases. The technical bias remains bearish because of a lower low in the recent downside move.

XAU/USD Technical Analysis

As of this writing, the precious metal is being traded near $1264.46 an ounce. A hurdle can be noted near $1300, a key psychological level ahead of $1357, the high of the last major upside rally on the daily chart and then $1400, the psychological level. A break and daily closing above the $1400 level shall trigger renewed buying interest, validating a rally towards the $1440 resistance zone.

On the downside, a support may be noted around $1239, an immediate horizontal support ahead of $1225, the psychological level as well as another key horizontal support area and then $1200, a major psychological number. The technical bias shall remain bullish as long as the $1200 support area is intact.

US Building Permits

U.S. single-family homebuilding and permits surged to more than 10-year highs in November, in a hopeful sign for a housing market that has been hobbled by supply constraints.

The Commerce Department said on Tuesday that single-family homebuilding, which accounts for the largest share of the housing market, jumped 5.3 percent to a rate of 930,000 units. That was the highest level since September 2007.

 Pointing to further gains, single-family home permits rose 1.4 percent to a pace of 862,000 units, a level not seen since August 2007. The jump in groundbreaking on single-family housing units suggests housing could contribute to gross domestic product in the fourth quarter.

Trade Idea

Considering the overall technical and fundamental outlook, selling the precious metal around current levels appears to be a good strategy in short to medium term.

usmanahmed7290@gmail.com'

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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