Gold inched higher on Wednesday, increasing the price of yellow metal to more than $1270.00 an ounce following some key economic releases. The technical bias remains bullish because of a higher high in the recent upside move.
XAU/USD Technical Analysis
As of this writing, the precious metal is being traded near $1275 an ounce. A hurdle can be noted near $1300, a key psychological level ahead of $1357, the high of the last major upside rally on the daily chart and then $1400, the psychological level. A break and daily closing above the $1400 level shall trigger renewed buying interest, validating a rally towards the $1440 resistance zone.
On the downside, a support may be noted around $1270, an immediate horizontal support ahead of $1250, the psychological level as well as another key horizontal support area and then $1200, a major psychological number. The technical bias shall remain bullish as long as the $1200 support area is intact.
Chicago Purchasing Manager’s Index
The headline index for the Chicago Business Barometer, widely known as the Chicago Purchasing Managers Index, rose to 66.2 in October from 65.2 last month. Comex December gold is at $1,269.10 an ounce, down 0.7%. The reading was the highest since March 2011. Consensus forecasts had called for it to be around 62.
The Chicago report tends to be watched closely as a sign of strength in the Midwestern manufacturing sector and as a possible precursor to the Institute for Supply Management’s PMI for the entire nation, which is scheduled for release on day. Readings above 50 in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50, the greater or smaller the rate of change.
Considering the overall technical and fundamental outlook, buying the precious metal around current levels appears to be a good strategy in short to medium term.