Gold - 61.8% Fib retracement hurdle is a tough nut to crack

Gold is having a tough time taking out $1261 levels (61.8% Fib R of June 6 high - July 10 low) despite signs of weakness in the US dollar. 

The Dollar Index is down 0.14% at 93.63, mainly on account of the rise in the EUR/USD, while gold is trading flat lined around $1259/Oz levels. 

Focus on US GDP

The preliminary US second quarter GDP is expected to show the economy expanded at an annualised rate of 2.6%, which is well above the 1.4% growth rate registered in the first quarter. 
The data is extremely important as it would either add credence (if strong) or deny (if weak) Fed’s claim that the slowdown seen in the Q1 is transitory. 

The yellow metal may rally if the US GDP prints in line with the estimates or beats estimates, although the response from the yellow metal and the USD is largely dependent on how the yield curve reacts. A steeper yield curve is gold bearish and vice versa. 

Investors will also take cues from the US employment cost index and the core PCE number. 

Gold Technical Levels

A break above $1261 (61.8% Fib R) would expose $1266.73 (resistance offered by the trend line sloping downwards from July 2016 high and Aug 2016 high). On the downside, strong support is seen at $1250 (50-DMA + 100-DMA + 50% Fib R). A daily close below the same would signal the rally from the low of $1204.87 has ended and could yield a sell-off to $1236.37 (June 26 low).