USD Relative Strength behind Gold Correction

gold-correction

The strong USD index is putting pressure on gold price. After the solid gains from yesterday, a corrective movement is in place.

Comex gold futures for August delivery was down by $16.40 to be traded at $1,395.60 while spot gold price declined by $16.45 to reach $1,397.70.

Euro was under the pressure of the European Union economic data. Unemployment claims rose by 12.2% in April, Germany reported a decline in retail sales for the third consecutive month and April consumer price index in the European Union increased by 1.4%.

Asian market still sends mixed signals. Nekkei index closed May with a decline for the first time over the past year. China manufacturing data are due to release on Saturday.

The USD index supported by the mentioned reasons gained some strength. Moreover, Nymex crude oil prices were weaker on Friday. Other notable US economic data to be released today are the personal income numbers, the ISM Chicago survey and the consumer sentiment survey.

London AM gold fix was at $1,410.25 while the preceding PM fix was at $1,413.50.

Speaking technically, the 7 months-old downtrend still appears on the daily charts. Recent gains and failure to retest April’s low at $1,321 advocates the beginning of a bullish double-bottom reversal pattern. The bulls’ next objective is to close sessions above the solid $1,450 resistance. On the other hand, the bears need to take the prices down under this week’s low at $1,372.80.