#Gold Technical Analysis# 24K99 News On Tuesday (August 27), in the early European session, spot gold accelerated its short-term decline, with the price dropping to $2,503.28 per ounce, hitting a new daily low, and plummeting nearly $15 during the day. Dhwani Mehta, Senior Analyst at FXStreet, wrote on Tuesday about the technical trends of gold prices.
Mehta pointed out that gold prices resumed their decline on Tuesday. With tensions in the Middle East seeming to ease, the market's focus is now on the US housing market and consumer confidence data.
Spot gold closed up nearly 0.3% on Monday, at $2517.94 per ounce. The price reached a high of $2526.90 per ounce in Monday's session, approaching the historical high of $2531.60 per ounce set last week.
Why did the gold price fall?
Mehta wrote that the gold price fell during Tuesday's trading, as concerns about the broader Middle East conflict seemed to ease, putting pressure on the traditional safe-haven asset gold.
According to a report by Reuters on Tuesday, senior US officials said that the short-term risk of a wider war in the Middle East has eased after clashes between Israel and Hezbollah in Lebanon.
General C.Q. Brown, Chairman of the Joint Chiefs of Staff of the United States, and Air Force General, said that a few hours before his arrival in Israel, Hezbollah launched hundreds of rockets and drones at Israel, and the Israeli military struck back at Lebanon to prevent larger-scale attacks. This was one of the largest conflicts in the 10-month border war, but when the conflict ended, Israel's losses were limited and neither side immediately threatened further retaliation.
When asked if the direct risk of regional war has decreased, Brown said, "To some extent, yes."
Focus on key data in the United States.
Mehta said that on this trading day, gold traders will look for clues from the upcoming U.S. consumer confidence index and housing data, and the speeches of Federal Reserve policymakers will also be closely watched for new policy implications.
At 21:00 Beijing time on Tuesday, the S&P/CS20 metropolitan area house price index for June will be released, with an expected annual rate increase of 6.0%, compared to a previous increase of 6.8% in May.
At 22:00 Beijing time on Tuesday, the Conference Board's August consumer confidence index for the United States will be released, with an expected value of 100.6, compared to 100.3 in July.
How to trade gold?
Mehta pointed out that the short-term technical outlook for gold price remains largely unchanged, as long as buyers hold onto the triangular resistance-turned-support level of $2468 per ounce, the upside risk remains intact. The 21-day Simple Moving Average (SMA) is close to the mentioned level, making it a strong support level.
It is worth mentioning that the price of gold has been consolidating since breaking out of the symmetrical triangle a few weeks ago.
At the same time, the 14-day Relative Strength Index (RSI) has turned lower but remains above 50, currently close to 61, proving that the bullish outlook is reasonable.
Mehta stated that gold buyers need to reclaim the record high of $2532 per ounce to target the next key barrier at $2550 per ounce.
If the gold price breaks through the above barrier, it may challenge $2600 per ounce, then move towards the triangle target of $2660 per ounce.
(Spot gold daily chart source: FXStreet)
In terms of downside, Mehta mentioned that the first support area for gold buyers is expected to be around $2500 per ounce, and if it falls below this level, last Friday's low of $2485 per ounce will be challenged.
If the gold price continues to fall below last Friday's low, there may be further decline towards the above-mentioned triangle resistance turned support at $2468 per ounce.
At 16:00 Beijing time, spot gold is reported at $2503.28 per ounce.