Dollar's Strength Weighs on Gold - 24 March 2016

Gold prices fell for the fourth time in five days as strength in the dollar overshadowed safe-haven buying that followed the bombings in Brussels on Tuesday. The market has been under the pressure since hawkish comments from Federal Reserve officials reignited speculation that the central bank could move to hike interest rates soon. In the latest economic data, new home sales data came in in line with expectations. The Commerce Department reported sales of new homes rose 2% in February. January's figure was revised up to 502K from the previously reported 494K.

The XAU/USD pair has extended its losses after the support at 1240.50 were broken yesterday. The market continues to edge lower in Asian trade, hitting the lowest level in four weeks, as shorter-term charts remained bearish. On the 4-hour time frame, the Tenkan-sen line (nine-period moving average, red line) crossed below the Kijun-sen line (twenty six-period moving average, green line) and XAU/USD is trading below the Ichimoku cloud. Plus, the Chikou-span (closing price plotted 26 periods behind, brown line) fell below prices on the same chart.

XAUUSD Daily

Recent price action brings up the possibility that prices will have a tendency to retreat towards the 1191/89 region before the market reverses. To the upside, there are hurdles such as 1220 and 1226/5. If prices recover and climbs back above 1226, then the market may find a change to approach the hourly cloud. In that case, keep an eye on the 1235.85-1235 area where sellers will try to increase pressure again. The bulls have to push and hold prices beyond 1235.85 if they intend to challenge the 1243-1240.50 region. The daily Tenkan-sen and Kijun-sen lines currently sit in this area, so it will be resistive. Breaking below the 1213 level, on the other hand, would be a negative sign and open a path to the 1205 level. If the fall doesn't halt in that region, then look for further downside with 1198 as target.

XAUUSD H4

Alp Kocak
Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.