FX.co ★ Analysis of gold for February 24, 2014

The US existing home sales declined 5.1%. It declined sharply in January from December, to 4.62 million units. The sales were down to the lowest level in 18 months. Starting this year, the US economic data were printed below expectations such as jobs data, building permits and other economic indicators. On the other hand, the Fed starts tapering its bond purchasing program. Gold is an investment tool used for hedging purpose. The weak dollar and low interest rates made investors to look at gold, which was hardly beaten in last 2 years.

From August 2013 high's, gold went back again to June's lows and made a higher low. From the low of the 2013 end, gold started picking up and slowly shifted it gear towards higher levels. In the daily chart gold is trading between 61.8-50.0 fib levels from last 5 trading days and it is restricted at the 200 DEMA level. Either side breaks make clear picture. RSI is indicating over bought signals. The higher level is restricted at the level of $1,337.0 from the cmp as per fib. Last week's low was very crucial. Breaking below, the price will fall back to $1,300.0, $1,290.0, $1,284.0, and $1,274.0. If trades are above $1,325, next targets will be at $1,336.0. Until gold crosses and trades above $1,338.0, we remain in sell side. If it trades above $1,338.0, then it may touch $1,360-$1,370.

Positional basis:

S1 $1,307.0 R1 $1,328.0

S2 $1,300.0 R1 $1,332.0

S3 $1,295.0 R1 $1,338.0

In the hourly chart gold has broken down and trading below its rising trend line from the last week's low at the level of $1307.0. Now the support became resistance. In the Asian trading session gold is trading at the level of $1,323.80. RSI still favours selling.

Intraday:

S1 $1,319.0 R1 $1,325.5

S2 $1,315.0 R1 $1,328.0

S3 $1,307.0 R1 $1,332.0

Recommendation-

Sell on rise and add more if it trades below $1,322.0 with targets $1,319.0, $1,316.0, and $1,312.0, sl is at $1,326.0.