Gold erases more than $15 this week, will the selloff extend?
- Gold looks to post its lowest weekly close of the year.
- Broad USD strength weighs on the pair.
- Precious metal struggles to capitalize on risk-off flows.
The troy ounce of the precious metal lost around $17 this week and now looks to record its lowest weekly close since the end of December near $1275.
The fact that the XAU/USD pair failed to hold above the critical $1300 mark, where the 100-day moving average is located, last week attracted technical sellers and caused the bearish momentum to gather strength. From a technical standpoint, sellers are likely to remain in control of the pair's price action unless it makes daily close above $1300 in the near-term.
Moreover, gold, as a traditional safe-haven, struggled to find demand in the first half of the week after the upbeat macroeconomic data releases from China, which eased concerns over a long-lasting slowdown in the world's second-biggest economy, boosted the risk appetite. Although next week's calendar won't be featuring any data from China, any positive headlines surrounding the U.S. - China trade conflict could have a significant impact on the market sentiment and force the pair to continue to push lower.
On the other hand, with major European currencies coming under heavy selling pressure in the second half of the week, the greenback gained traction and put additional weight on the pair's shoulders. The US Dollar Index recovered last week's losses and is now looking to close above 97.30. Chicago Fed's National Activity Index and existing home sales data from the U.S. on Monday will be looked upon for fresh impetus.
Technical levels to consider