XAU/USD Update – 15/7/14

15/7/14 (13.00 pm) Expectations of an extended gold rally have been severely broken with yesterdays 2.5% slump its biggest one day decline since early December as fading uncertainties over Portugal’s banking sector and a gain in US markets pushed investors to take profits.

The decline from $1340, through the key $1320 support level has put the importance back on the downside. Having said that XAU/USD is currently trading at $1311 just above the $1300 level, an obviously supportive area based upon not only the latest action that we have seen in this zone, but on the fact that it is a large, round, psychologically important figure. Sellers are testing support at $1305 the 38.2% Fib retracement point with a break below that exposing it to the 50% level at $1292. On the other hand, a reversal above the 23.6% Fib at $1320 targets rising trend line support turned resistance at $1327. Therefore currently it is difficult to start selling at this point as we haven’t proven that the move is for real, so we need to break down below the $1280 level before feeling certain enough to start selling.

During the session ahead a relief rally for gold centres on the upcoming testimony from Janet Yellen and US Advance Retail Sales data which could prove key in pushing gold upwards.