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FxWirePro: Gold declines sharply after Fed Powell comments, good to sell on rallies

Gold has declined more than $40 from 6 -year high $1440 made yesterday. The yellow metal has lost its shine after Fed Chairman Powell speech. Fed Powell said that the US economy is facing growth uncertainties due to trade war and global growth slowdown. He emphasizes on ‘wait and see' mode on potential rate cuts. Markets eye Trump and Xi-Jinping meeting the G20 summit for further direction.

 

US dollar index has halted its 5- day of losing streak and shown a minor jump of more than 50 pips. Any break above 96.45 (200- day MA) confirms minor bullishness.

 

US 10 year yield is also in the oversold zone and bullish divergence in CCI (50) shows that there will be a slight jump which is slightly negative for gold. It is consolidating in a narrow range.

 

Technically, near term resistance is around $1440 and any break above that level targets $1460/$1480.

 

On the flip side, near term support is around $1398 (38.2% fib of $1319 and $1411.70) and any break below confirms minor weakness and a dip till $1382/$1365 is possible..

 

It is good to sell on rallies around $1415-17 with SL around $1427 for the TP of $1382/$1365.

 

By Rangarajan Hariharan
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