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The US dollar moved higher recently, and the effect was also visible on commodities. The prices of yellow metal fell significantly and traded to new lows. Last week, we mentioned that the GOLD might dive sharply and so did happen. GOLD traded below the $1150 level recently and looks poised for more downside in the short term. It has breached an important support area which is likely to encourage sellers. There are several risk events lined up today, including the US ADP data and the US ISM non-manufacturing index. If the outcome comes out positive, then GOLD might head lower in the near term.

There was a critical triangle formed on the hourly chart of GOLD, which was broken recently to the downside as GOLD fell towards the $1146 level. The downside was swift after the break as can be seen in the chart below. The hourly RSI is around the oversold area, which increase the possibility of a correction in GOLD. It might correct higher in the short term, but in that situation it is likely to find resistance around the broken triangle support area. The 61.8% fib retracement level of the last drop from the $1174 high to $1146 low is also sitting around the same area. So, a lot of selling interest might be seen around the $1160-65 area if reached moving ahead.

We cannot deny that GOLD might also continue lower from the current levels and does not correct higher. A break below the recent low might call for a test of $1140-35 levels.

Overall, one might consider selling rallies as long as the pair stays below the $1165 level.

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Posted By IKOFX Technical Team: Online Forex Broker
Website: http://ikofx.com