Gold Slides Further Below $1280 Ahead of ADP Report
After failing to sustain above $1300 mark, Gold bulls continue to lose grip as the precious metal extends its slide below $1280 level.
As
the US Dollar witnessed some traction on Tuesday, the metal failed to
built on to its recent gains above $1300 mark. Strong USD makes
investments in dollar denominated commodities, like gold, less
attractive for investors. Hence, any further signs of USD recovery might
trigger some near-term corrective move for gold prices.
Moreover,
the metal's higher levels were not confirmed by the respective higher
reading on a momentum oscillator, RSI, pointing to a bearish divergence.
The occurrence of a bearish divergence was the first sign of weakening
momentum, which now seems to reflect in the prices.
Traders will
now take further cues from the US private sector employment report, ADP
report, due for release later during the US session.
Technical levels to watch
From
current levels, the metal seems more likely to extend the weakness
below $1270 level towards $1267-65 support area. This $1265 support
region represents 38.2% Fibonacci retracement level of $1207.64-$1303.77
up-move. Hence, weakness below this support would confirm the bearish
divergence and could open room for further near-term corrective move.
Meanwhile
on the upside, 23.6% Fibonacci retracement level near $1280-81 zone,
seems to act as immediate resistance. Even if the metal clears this
immediate resistance any further up-side might continue to confront
strong hurdle near its last week's daily closing high level, $1292-93
zone.
