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Gold : Posting Losses But Seems Limited

(XAUUSD : 4 Hour Chart)

Gold fell today after finding resistance from the rising resistance trend line of an upward sloping channel within which it is trading. The losses came after the upbeat Empire State Manufacturing Index and Capacity Utilization Rate data. The Empire State Manufacturing Index which is a leading indicator of economic health improved to 19.3 better than the economist’s expectation for a decrease to 15.2. The Capacity Utilization Rate which is a leading indicator of consumer inflation increased .2% to 79.1% better than the economist’s expectation for the reading to remain unchanged.

The 50 day SMA is contracting towards 100 day SMA trying to crossing over it which will confirm the continuation of uptrend. Also there is a rising support trend line from which the pair should find support.However losses remain capped as the tensions in Iraq continue to support the demand for Safe Haven. Also investors will remain cautious ahead of the outcome of the upcoming Federal Reserve policy meeting on Wednesday as it will give some indication on the timing of interest rate increase.