In early February, the price of gold, which investors perceive as a “shelter asset”, was growing rapidly in view of a sharp decline of USD.
In the middle of the month, the price reached 1361.40 mark, and the market was in full confidence that it would reach the local maximum of the end of January (1366.00). However, that didn’t happen: the pair first corrected downwards, and then significantly sank in view of the growth of investment interest to USD. Additional pressure on the instrument was provided by the sales of precious metal: due to the price drop, investors began to close long positions and open short ones, counting on a prolonged drop in the asset. As a result, over the past five trading days, the price of gold dropped by more than USD 44 and continues to decline.
Today, the economic calendar is almost empty, and the instrument will be influenced by trade sentiment, though the likelihood of lateral consolidation formation is high.
Support and resistance
In the short term, gold will continue to decline within the current narrow and steep channel with a target level of 1307.00, which is the local low of early February. In the future, an upward correction is expected, and after it – continuation of the decline in the asset. In the medium term, the price for an ounce may fall below the USD 1,300.
Technical indicators confirm the fall outlook: MACD indicates growth of volumes of short positions, and Bollinger Bands have revered downwards.
Support levels: 1316.15, 1313.50, 1309.00, 1307.00, 1300.00, 1298.00.
Resistance levels: 1326.50, 1330.50, 1335.0, 1345.85, 1357.00, 1361.40, 1366.00.
In this situation, short positions may be opened from the current level with the target at 1307.00 and a short stop-loss at 1329.50.
|Support levels||1298.00, 1300.00, 1307.00, 1309.00, 1313.50, 1316.15, 1326.50, 1330.50, 1335.0, 1345.85, 1357.00, 1361.40, 1366.00|
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