Gold appears set for major correction below $1300

Gold faced rejection near the major long-term resistance around $1373, the 76.4% fib level, on Thursday and extended the downside movement today. The precious metal is likely to resume a deep correction from the current levels which my last up to $1280 or even below. The bias for the yellow metal will, however, remain bullish because of the Higher High (HH) on the daily chart.

As of this writing, gold is being traded at $1369 an ounce. Resistance may be noted near $1373, a break and daily close above $1373 shall expose more downside movement toward $1418 that however appears a less likely scenario.

The metal is holding a range between $1376 and $1364, a breakout through this range will provide a clear direction to the metal. Major support can be noted around $1340 which is the 61.8% fib level.

Yesterday, US census bureau released US retail sales data which was better than expectations. Retail sales in the US rose to 0.3% in February as compared to the revised 0.6% drop in the month before, analysts had predicted 0.2% increase for February. Similarly, the number of unemployed people who claimed jobless benefits declined to 315,000 during the week ended on March 07 compared with the revised increase of 324,000 in the week before, market was expecting an increase to 330,000. So in a nutshell, limited correction is expected in oil price before upside rallies.

Today, Reuters and the University of Michigan will release the monthly consumer confidence report for February. According to the forecast, the consumer confidence in the US increased to 82.0 this month as compared to 81.6 in the previous month. A better than expected reading will be bearish for gold and vice versa. 

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