The consumer confidence and US home sales data were a real slap in the face if you are trading gold and hoping for the upside. However, the technical for gold are pointing for oversold signal which could just may provide a little pause in this sell off or give us a mean reversion trade.
But, make no mistake it is the strength in the dollar, which is the main denominator and this is impacting the price for both gold and oil. Janet Yellen’s comments have really inflated the sentiment among dollar bulls who are feeling very confident with their long position that the rate hike will finally take place this year.
Sadly, this is not a joyful news for oil traders, although you can argue that the commodity has formed a strong bottom for now, but it is still difficult to sleep at night for traders who are holding long positions in crude or Brent.
The aggressive sell off has paused for the time being. If the price cross its 61.8% Fibonacci retrenchment level, the probabilities will be stacked in favor for the upside move. However, if the price fails to break above the 38.2% or the 50%, then the bias remains towards the downside.
1214-1210 Resistance level