Spot Gold pulled back from fresh two-week high at $1265 on Thursday, trimming strong gains of the previous day, when yellow metal surged nearly 2% after political crisis broke out in the US.
Strong fall of dollar on political uncertainty over raising doubts whether US president Trump will be able to follow through with his campaign promises on tax cuts and fiscal stimulus, increased demand for safe haven assets and boosted gold price.
Wednesday’s rally broke above $154 pivot (daily Kijun-sen) and cracked next target at $1264 (Fibo 61.8% of $1295/$1214 descend), generating bullish signals, but the rally showed signs of fatigue.
Gold price eased on profit-taking and dollar managing to consolidate after previous day’s losses, threaten to extend pullback.
Scenario is supported by overbought slow stochastic on daily chart and RSI turning south.
Former strong resistances at $1245 zone (daily cloud top / converged 20 / 200 / 55 SMA’s) now act as strong support which should ideally contain correction and keep near-term bulls intact.
Otherwise, stronger correction of $1214/$1265 rally could be expected on sustained break below this support.
Res: 1254; 1260; 1265; 1270
Sup: 1249; 1245; 1240; 1236