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Gold inched higher on Wednesday, increasing the price to more than $1320 an ounce. However, the precious metal remains vulnerable after a major bearish breakout earlier this week. The technical bias already remains bearish because of a Lower High in the recent upside rally.
Technical Analysis
As of this writing, the yellow metal is being traded around $1321. A hurdle can be noted near $1330, the trendline resistance area as demonstrated in the given below daily chart. A break and daily closing above the $1330 resistance shall open doors to $1352, the swing high of the recent upside rally.
On the downside, the precious metal is likely to find a support around $1313, the intraday low of today ahead of $1301, the confluence of the psychological number as well as the swing low of the latest major downside move. The technical bias will remain bearish as long as the $1352 resistance area is intact.
US Budget Deficit
The U.S. government posted a $107 billion budget deficit in August, a 66 percent increase from the same month last year, the Treasury Department said on Tuesday. This is compared to a deficit of $64 billion in August 2015, according to Treasury’s monthly budget statement. Analysts polled by Reuters had expected a $108 billion deficit for last month. When accounting for calendar adjustments, August would have shown a $118 billion deficit compared with an adjusted $107 billion deficit in the same month in 2015. The fiscal year-to-date deficit was $621 billion through August, 17 percent up from a $530 billion deficit at the same time last year. There were no calendar adjustments.
Trade Idea
Considering the overall technical and fundamental outlook, selling the precious metal around $1330 resistance could be a good strategy in short to medium term.
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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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