GOLD enjoyed a nice ride during the past couple of weeks, but it looks like it may have made a short-term top.
The US Dollar seems to be gaining back bids, which may help GOLD sellers to retain traction.
There is a support trend line formed on the 4-hours chart, which was cleared by sellers to ignite a downside move.
More losses are possible if the recent trend line break is real for GOLD.
GOLD Technical Analysis
GOLD recently climbed to trade near $1260 resistance area where it found sellers and started to move down. There was a downside reaction, as a support trend line formed on the 4-hours chart was cleared by sellers.The downside move after the break was not convincing, but there were a couple of spikes below the trend line, suggesting the price is finding sellers.If the recent trend line break is real, then there is a chance of GOLD price to trade down towards the $1200 support area. On the upside, the 50% Fib retracement level of the last drop from the $1239 high to $1202 low may act as a resistance and stall gains in the near term.
US Manufacturing PMI
Recently in the US, the Manufacturing Purchasing Managers Index (PMI), which captures business conditions in the manufacturing sector and dominates a large part of total GDP was released by the Markit Economics.The forecast was slated for a minor decline from the last reading of 52.4 to 52.0 in February 2016 (preliminary value). However, the outcome was a bit disappointing, as the US Manufacturing Purchasing Managers Index (PMI) declined to 51.0.Commenting on the report, the chief economist at Markit, Chris Williamson, stated “US factories are reporting the worst business conditions for over three years. Every indicator from the flash PMI survey, from output, order books and exports to employment, inventories and prices, is flashing a warning light about the health of the manufacturing economy”.Overall, the report did not match the forecast, but there was nothing critical to distort the US Dollar rally in the near term. There is a chance that it may continue to gains bids, and the GOLD price could move down further towards $1200.
If the recent trend line break is real, then there is a chance of GOLD price to trade down towards the $1200 support area. On the upside, the 50% Fib retracement level of the last drop from the $1239 high to $1202 low may act as a resistance and stall gains in the near term.
Commenting on the report, the chief economist at Markit, Chris Williamson, stated “US factories are reporting the worst business conditions for over three years. Every indicator from the flash PMI survey, from output, order books and exports to employment, inventories and prices, is flashing a warning light about the health of the manufacturing economy”.Overall, the report did not match the forecast, but there was nothing critical to distort the US Dollar rally in the near term. There is a chance that it may continue to gains bids, and the GOLD price could move down further towards $1200.