Gold consolidates losses and heads for close well below $1200
- Gold extends slide amid a stronger US dollar.
- Technical outlook points to further losses with price firm under $1,200.
Gold accelerated the bearish correction today and dropped to $1,189/oz, the lowest since August 23. It rebounded later but held below $1,195 at all times. After moving sideways with a bearish bias, broke to the downside, intensifying the negative tone. The daily close under $1,200 could expose YTD lows ($1,160).
The yellow metal bottomed today after the release of better-than-expected US data (ISM manufacturing) and previously was falling amid risk aversion during the European session. As long as the US dollar remains strong, any recovery seems limited.
Technical outlook
“Heading into the Asian opening, the daily chart shows that spot is now breaking below a firmly bearish 20 DMA while the Momentum indicator eases sharply from extreme overbought readings and the RSI accelerates its decline, currently at 42, all of which favors another leg lower for this Wednesday”, says Valeria Bednarik, Chief Analyst at FXStreet.
According to her, the 4 hours chart, shows XAU/USD with a bearish stance, below all of its moving averages for the first time since in two weeks and adds that the momentum indicator is heading strongly lower well into negative territory with the RSI consolidating around 33.