Gold hits 2-week low on stronger dollar

Spot gold fell to its lowest in two weeks, plummeting to $1,262.5 an ounce in US trading hours, after failing to extend its rally beyond the critical 1,300.00 level last week.

The commodity suffered from a strong dollar and poor Chinese imports. According to April's trade balance figures, China's exports shrank almost 2% last month from a year earlier, while imports sunk by 10% underlying weakening demand from one of the world's largest consumers of gold.

Gold technical perspective

"From a technical point of view, the daily chart shows that the price fell down to test a mild bullish 20 SMA, while the technical indicators have turned lower, but hold above their mid-lines, not enough to confirm a downward continuation at this point,” said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart, the downside potential is present, but still needs to be confirmed, given that the price remains well below a bearish 20 SMA, but the technical indicators have turner higher, with the RSI now bouncing from oversold territory. A downward extension below the daily low, however, should signal additional declines for this Tuesday, towards 1,242.50, a strong static support level.”

Support levels: 1,262.15 1,253.90 1,242.50. Resistance levels: 1,271.30 1,280.80 1,292.05.