Fundamental View

The sell-off seems to have been triggered by the strength in the US dollar, Gold’s biggest nemesis.

The dollar index, which tracks the value of the greenback against majors, is on track to end the week. Dollar’s strength could remain bid next week, as the data released yesterday showed the consumer spending ticked higher in March and will likely remain solid in the near future with jobless claims hitting 50-year low.

There is a good relationship between S&P 500 and Jobless Claims.

If Jobless Claims drop then S&P 500 goes higher. If S&P 500 goes higher then Gold drops.

FED is keeping patient to hike rates this year, but economic reports supporting US Dollars.

Another US economic indicators are much related to gold’s move is US Core durable goods orders and durable goods orders.

US Core durable goods orders and durable goods orders are scheduled Thursday- April 25, 2019. Both reports are expected well than previous reports.

Core durable goods orders

Core durable goods orders previous reading was -0.1% and forecast 0.2%.

Durable goods orders previous reading was -1.6% and forecast 0.7%.

US recent data supporting both reports can beat the market expectation.  

So fundamentally there is more room to drop gold. If those report fails to beat market expectation than gold has a good chance to rebound.

Technical View

The big red weekly candle reinforces the bearish view put forward by the previous week’s gravestone doji.

Gold looks set to test the support of the trend line connecting August and November lows, currently at $1,260. That support is seen rising to $1,263 next week.

If $1260/58 breaks next target would be $1250/52 and final target is $1230.

On the other hand, immediate resistance $1280, if $1280 breaks and stable next target $1285 area. And final target is $1295.  

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