Gold price corrected higher, but it faced a strong resistance near the $1,216 zone against the US Dollar.
There is a significant bearish trend line formed with resistance near $1,212-1,215 on the 4-hours chart of XAU/USD.
China’s CPI in July increased 0.3% (MoM), more than the forecast of +0.2%.
The US Producer Price Index for July 2018 will be released today, which is forecasted to increase 0.2% (MoM).
Gold Price Technical Analysis
After forming a low at $1,204.47, gold price corrected higher against the US Dollar. The price traded above the $1,210 level, but it faced a lot of selling interest above the $1,216 level.
The 4-hour chart of XAU/USD indicates that the price failed on multiple occasions near a significant bearish trend line with current resistance near $1,212-1,215.
The last major wave failed near the trend line and the 61.8% Fib retracement level of the last decline from the $1,228 high to $1,204 low. As long as the price is below the trend line and $1,215, it remains at a risk of more losses.
An immediate support is at $1,204, below which, the price may perhaps test the $1,200 support zone. Should the price fail to hold the $1,200 support, there could be heavy declines in gold.
On the other hand, if the price recovers and breaks the trend line plus $1,215, it may possibly move towards the $1,220 level. Above $1,220, the price is likely to test the last swing high at $1,228.
Today, China’s Consumer Price Index report for July 2018 was released by the National Bureau of Statistics of China. The market was looking for a rise of 0.2% in the CPI in July 2018 compared with the previous month.
The result was positive as there was a rise of 0.3%. The yearly change posted a rise of 2.1%, compared with the forecast of +1.9%.
Overall, the US Dollar is trading with positive moves and it could ignite more losses in gold. Recently, the GBP/USD pair fell sharply to multi-month lows, helping the greenback to gain traction.
Economic Releases to Watch Today
- US Initial Jobless Claims – Forecast 220K, versus 218K previous.
- US Producer Price Index July 2018 (MoM) – Forecast +0.2%, versus +0.3% previous.
- US Producer Price Index July 2018 (YoY) – Forecast +3.4%, versus +3.4% previous.
- US Wholesale Inventories for June 2018 – Forecast 0%, versus 0% previous.