Gold: further correction possible as it fails to hold above $1330

• Metal drops back under $1330. 
• Bearish correction remains in place. 
• Concerns about US government shutdown not having a strong impact. 

Gold failed to hold above $1,330/oz and erased daily gains. During the US session dropped to $1,326. Price moved all day in a small range: it peaked at the beginning of the current session at $1,333 and then pulled back. 

The potential US government shutdown this weekend is not boosting gold, neither having an impact on markets.  Lawmakers have not agreed on a budget. Also, gold remained muted today after the release of US economic data that included a positive jobless claim reading (initial claims reached the lowest since 1973), mixed housing reports and a larger-than-expected slide in the Philly Fed Manufacturing Survey. 

Some analysts point out that a government shutdown would likely be supportive of safe-haven assets like gold. Others, see the potential shutdown as a political issue without economic consequences and not being a significant deal because they estimate that it will be eventually resolved. 

XAU/USD: First weekly correction in a month

The yellow metal is falling almost $10 from the level it closed last week. It is headed toward the first weekly decline after rising constantly during the previous five weeks when it rallied from near $1,240. The correction appears normal so far posting no risks to the main trends and could be attributed to some profit-taking. Many technical indicators were showing overbought readings and a period of consolidation or correction seemed normal. 

From current levels, a confirmation below $1,325 could clear the way for an extension of the correction with a potential target at $1,320 and then $1,314. On the upside, above $1,335 gold could recover the initiative and go for a test of 2018 highs located at $1,344.