Early on Monday morning, gold prices edged above $4,200 to hit their highest levels in a fortnight. Gold then drifted lower before it inched up again yesterday afternoon. But the sellers reappeared during the Asian Pacific session, pushing it back down towards $4,100 as the US dollar edged higher.
The precious metal appears to be consolidating now, and it could be that it manages to dig in above $4,100. Its daily MACD has pushed up off mildly oversold levels, suggesting that momentum is building to the upside. But gold remains vulnerable to any additional dollar strength, and it’s far from sure if the bulls are ready to re-enter the market.
A failure to hold above $4,100 obviously opens up the possibility of a decline back below $4,000. Then there's the added danger of another break lower. So, much depends on the greenback and investor sentiment this week, with tomorrow’s release of minutes from the Fed’s FOMC June meeting a focal point.
Source: TN Trader
Despite the pullback, there are signs that further downside pressure could prove limited. Last week’s softer US labour numbers have reduced expectations for aggressive Federal Reserve tightening, while central bank demand for gold continues to provide an underlying support base.
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