Gold bulls target old daily support and a 38.2% Fibo

• Gold is correcting the recent US dollar strength. 
• Bulls can target a 38.2% Fibonacci retracement ton the daily chart and confluence of old support. 

A stronger USD following the Federal Reserve hawkish tone kept the commodities complex down and weighed n precious metals. 

Gold experienced heavy selling, with the precious metal closing below $1,800/oz and ending down by 0.52% at $1,764.23 ranging between a low of $1,761.04 and $1,797.31.

The US dollar extended its advance against a basket of currencies in a classic short squeeze as it built on gains logged after the US Federal Reserve surprised markets earlier in the week with a hawkish hold.

The dollar index DXY, which tracks the greenback against six major currencies, was printing its highest levels since mid-April at 92.4050 which put the index on pace for its best weekly jump in about 14 months.

Risk appetite is lower and US stocks are under pressure as the Fed has signalled that it will raise interest rates and end emergency bond-buying sooner than expected.

''Considering that gold was set-up for a pullback like a speed bump on the racetrack, with speculative and physical flows slowing, the ongoing pullback likely has more room to run.,'' analysts at TD Securities explained.

''CTAs can add to their shorts below $1730/oz, which suggests some potential for sustained downside momentum.''

Meanwhile, the screw was turned on Friday when St. Louis Federal Reserve President James Bullard said that the US central bank's toward a faster tightening of monetary policy was a "natural" response to economic growth and particularly inflation moving quicker than expected.

In this regard, on a quieter week ahead in terms of data, the emphasis will be on the shorter end of the US yield curve which is dollar positive.

This may help to push gold below critical weekly support where the counter trendline meets that late April weekly prices, May highs and Nov lows in horizontal structure in the $1,760s. 

Gold technical analysis

The daily chart shows that the price is on the verge of a weekly bullish Head and Shoulders with the first upside target coming with a confluence of the prior lows and a 38.2% Fibonacci retracement level.