Fundamental Analysis – Preliminary GDP data would fuel taper talk
Tapering talk, which is so far heavily influencing the price of the yellow metal, will take further fuel when an economic data will be released this afternoon – US Q2 GDP revision. The forecast is for the upward revision for this number to 2.2% from previous reading of 1.7%. However, there are certainly doubts if such is possible, given that the recent run of poor economic data which has been coming on the weaker side.
The recovery in the US markets is heavily based on the housing market and the data released yesterday for pending home sales has without doubt surprised the market when the final reading came in at -1.3% while the previous reading was 0.2%. Nonetheless, it is also a reality that the country’s deficit is also shrinking and the recent reading has shrunk to $34 billion from the previous reading of $44 billion.
Technical Analysis -Gold fell from its resistance- What now
Gold is trading has fallen from its resistance zone on a 30 minute time frame. The resistance does have a some importance as the price has left this zone with a sharp ballistic move to the downside which was a confirmation of a heavy selling pressure. The yellow metal is trading below the 50 day (shown in green) and 100 day (shown in yellow) moving averages which confirm that the bulls are losing their control. However, the precious metal is trading within the upward channel and has not broken this channel so far which confirms that the upward trend is still very much intact.
Similarly, the RSI is showing some sign of deflection which means that the price is making the lower low, but the RSI is making the higher high. Therefore, this confirms that the bias could be to the upside.
1283 -1265 Minor