Gold prices fell 2.14% on Tuesday as demand for the greenback increased after data on U.S. services, durable goods orders and consumer confidence beat estimates. Data released from the Commerce Department showed that demand for durable goods increased by 0.8% in April and Markit reported that services business activity index rose to 58.4 in May from 55.0 in April.
According to data from the Conference Board, consumer confidence index climbed to 83.0 from a revised 81.7 the prior month. The XAU/USD pair fell to its lowest level in sixteen weeks after breaking below the 1277 support level triggered a sell-off. The pair traded as low as $1263.17 an ounce during the Asian session today. Finally gold prices broke out of the consolidation area which we have been watching for days.
In my recent analysis, I have been telling that there was more resistance to the upside because of the location of the Ichimoku clouds on the weekly and daily charts. It looks like we are getting ready to test the next important support at 1256 but we might see some profit taking around the 1263 level which happens to be the 61.8% retracement level based on the bullish run from 1182.35 to 1392.04. If that is the case, expect to see resistance at 1268 and 1277. If the downward pressure continues and the market breaks below 1256, I think 1250/48 area will be the next stop.
