Gold hit 10-day low in Asia, what’s next?

Gold hit a 10-day low of $1240.36 this Friday morning in Asia as the Dollar Index rose to a two-week high of 100.60 on Thursday. 

The data released yesterday revised US Q4 GDP higher to 2.1% from the preliminary estimate of 1.9%. More importantly, the details revealed the consumer spending jumped 3.5% y/y, compared to the Bloomberg estimate of 3.0%. 

The strong consumer spending kept the US dollar well bid throughout the North American session. The bullish dollar sentiment has been carried forward to the Asian session as well. Consequently, gold remains on the back foot. 

Focus on personal spending

The data due today is expected to show the personal spending rose 0.2% in February, while income rose 0.4%. An uptick in the savings rate (higher income, low spending) could derail the US dollar rally and help gold revisit $1250 levels. 

On the other hand, a sharp rise in the personal spending would open doors for a sell-off to $1233.50 (Feb 15 high) - $1230 levels. The offered tone around gold would also gather pace if the core personal consumption expenditure beats estimates. 

Gold Technical Levels

The metal was last seen trading around $1241/Oz. A breakdown of support at $1235.91 (Feb 23 low) would expose $1228 (50-DMA). On the higher side, breach of resistance at $1248 (5-DMA) would open doors for $1258 (200-DMA).