Gold rejected again from above $1,230, erases daily gains

• Yellow metal remains unable to extend rally above $1,230/oz. 
• Stronger US dollar during the US session pushed XAU/USD back to the $1,225 area. 

Gold is about to end the day flat, although consolidating most of the gains of last week and yesterday. Today peaked at $1,232/oz but after the beginning of the US session pulled back to the $1,225 area. The rally in gold that started last week from $1,185 is currently on pause, with price consolidating near $1,230. 

The move off highs during the American session, took place on the back of a stronger US dollar against the yen and European currencies and amid a rally in Wall Street. The Dow Jones was rising 1.80% and the Nasdaq 2.45%. 

Technical outlook and levels to watch 

For the second day in-a-row, XAU/USD failed to hold above $1,230. So far, the correction has been limited and the $1,230 zone is becoming a key resistance. According to Valeria Bednarik, Chief Analyst at FXStreet, the metal retains its bullish stance as technical readings in the daily chart show with price above the 100 DMA and while the 20 DMA gains upward traction below it.

“Indicators in the daily chart have lost directional strength but hold near overbought readings. In the shorter term, and according to the 4 hours chart, the metal could correct lower, as despite holding above a bullish 20 SMA, the indicator is losing upward strength, while the Momentum and the RSI ease within positive levels. Such scenario seems likely on a break below 1,223.40, the immediate support”, added Bednarik.