Gold prices continued to slide yesterday. XAUUSD reached an intraday high at $1,479.14 but dropped to $1,470.20 during the European session. The precious metal was able to pare some of its gains to finish the New York session at $1,475.06.
Donald Trump Impeachment Shrugged Off
The spike in gold prices late in yesterday’s trading may be attributed to the US House of Representatives voting to impeach US President Donald Trump. According to reports, the basis for his case is abuse of power and obstruction of investigation. Now, it is up to Senate to hold a trial and decide on whether or not impeach Trump. While this news would have typically sparked risk aversion, it seems that market participants widely expect that it will not push through. This is mostly because despite the trials which are likely to take place next year, Republicans control the Senate.
US Data Due Today
Today, gold prices could be dictated by second-tier data from the US. At 1:30 pm GMT, the Philly Fed Manufacturing Index is due to be released. It is expected to show improving manufacturing conditions in Philadelphia with the forecast at 8.1. A lower-than-expected reading could push gold prices higher as it would hint weakness in the sector.
XAUUSD is still stuck in the consolidation that I pointed out yesterday. However, a closer look at the 1-hour chart shows that gold prices have been slowly trending lower. This is evidenced by the descending channel that becomes apparent when you connect the most recent highs and lows of XAUUSD.
As of this writing, it looks like gold prices are on their way to the bottom of the channel around $1,470.50. This price also coincides with the 200 SMA. Now, reversal candles at this level could mean that buyers are priming for a move higher. If there are enough buyers in the market, XAUUSD could soon test resistance at the top of the channel at $1,477.00.
On the other hand, if support at the 200 SMA and the bottom of the channel does not hold, we could see gold prices fall to their December 12 lows around $1,464.50.