Gold prices declined for a second consecutive day following mixed US data. US weekly jobless claims came in at 258,000, higher than the estimated 244,000, while Final GDP for the fourth quarter improved to 2.1%, better than both the 1.9% preliminary reading and 2.0% forecast. The precious metal also sank following strong risk appetite for US equities.
Price action on the gold daily chart shows that price continues to respect the 200-day SMA and formed a bearish Butterfly pattern on February 27th. Point D was confirmed with the 200% Fibonacci expansion level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C leg. If the bearish move continues, key support may come from the 50-day SMA, which currently trades at the $1,228.50. Deeper support may come from the $1,200 to $1,210 region. To the upside, major resistance remains the 200-day SMA, which trades at the $1,262.00 level.The trade: Sell Gold at $1,245 with a stop loss at $1,250 and a take profit at $1,230. The Risk/Reward Ratio is 1:3