Gold retreats toward $1330 after 4-day rally

Gold erased Tuesday's gains, after falling during the American session amid a rally of the US dollar against safe-haven assets. The greenback strengthened after President Trump agreed to a request from Democrats to raise the debt ceiling and extend government funding, including also an aid package for the victims of Hurricane Harvey. 

The yellow metal fell from $1,340 and bottomed at $1,331. At the moment it trades at $1,333 down 0.47% for the day. It is the first daily loss after rising 3.45% from August 31 low, to yesterday’s high. 

Technical outlook 

Valeria Bednarik, Chief Analyst at FXStreet points out that the metal is poised to correct further lower: “Technical indicators are finally retreating substantially from overbought readings, although the price remains far above bullish moving averages, these lasts indicating that the bullish case is not over yet”. 

In the short-term and according to the 4 hours chart, Bednarik points out that the risk has also turned towards the downside, “as the price is breaking below its 20 SMA, the Momentum is entering negative territory with a strong downward slope, whilst the RSI also heads, south, but currently at 53.”

To the downside, the immediate support could be seen at $1,3330 followed by the area around $1,325 (Friday close / weekly low). On the upside, resistance levels might lie at $1,338 and $1,344 (Sep 5 high).