Gold down on the day, poised to snap weekly win streak

It’s now a testing time for gold as mentioned yesterday here: The technical lines in the sand have shifted in gold

And with the latest fall today, gold is now down 1.4% on the week and poised to snap its win streak of eight consecutive weeks of gains. Yup, it has been a banger of a start to the year for gold. But with the break in momentum, are we overdue a stronger retracement from here?

Well, there’s certainly an argument for that as we hardly got much of any retracement to this bullish run since last year.

That being said, dip buyers are still not shying away as they are stepping in around $2,890 in the past few sessions as seen above. That reaffirms there is still some buying appetite out there. However, unless buyers can break back above the key hourly moving averages, the battle lines continue to side with sellers in the near-term for now.

Looking to the next few days, we might have to wait out month-end flows to have a better idea. The dollar is firmer in the past few sessions but it’s been tough to make sense of the push and pull in markets this week.

US stocks are softish but put on a mixed showing yesterday before Nvidia delivered another earnings beat after the close. US futures are now higher with tech shares leading the way. And in the bond market, we continue to see yields slide on the week. 10-year yields are now down to 4.27% after having moved to test the 200-day moving average of 4.24% overnight.

In spite of those developments, the dollar is holding its own and gold is struggling to reinvigorate itself after the technical break on Tuesday.

So, yeah. I reckon we’d be able to get a better handle on things once month-end flows are out of the way. But as the dust settles, gold might find itself in a tough spot on the charts if things continue this way next week. And that might argue for a deeper pullback – one that could have the potential to run back towards its 100-day moving average, seen at $2,718 currently.

If that happens, it feels like it will be a pullback that’s way overdue. I’m still a gold bull in the bigger picture and I won’t be the only one who is waiting to pile in on more longs once we do trigger such an event.

This article was written by Justin Low at www.forexlive.com.