INTERMEDIATE TERM TREND: NEUTRAL/BEARISH
SHORT TERM TREND: NEUTRAL/BEARISH
VERY SHORT TERM TREND: NEUTRAL
After touching the long term down trend channel at 1255 last week, gold sold off sharply on Thursday and has spent the last few trading sessions consolidating near the lows at 1230 in quiet market conditions.
The test and rejection of the resistance level at 1255 will have bulls on alert for further declines, with a return to 1180 still the favoured scenario within the next 30 days. The market also failed to break the 50 DMA and is currently testing the 20 DMA around 1230.
Equities and the dollar appear to have finished their respective corrections and are looking in bullish mode again - this is clearly bearish for gold. Oil continues to tumble, with the price struggling to hold onto support around $80 a barrel - this is also bearish for gold and suggests inflation is not an issue in fact deflation is rearing its head once more.
Support can be found at 1222, 1217, 1203-1205, 1200 and 1180-1183. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - the failure to break the 65 week MA and the break down of the triangle pattern on the daily chart makes this scenario much more likely, particularly as gold has now reached and tested this crucial support level.
Resistance can be found at 1232, 1238, 1250, 1255, 1263, 1271-1273, 1277, 1290-1292, 1300-1302, 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354 and 1392-1395. A second failure to break through the key 65 week MA confirms that the intermediate down trend is intact and a retest of 1180 suggests a break of that level is likely.
Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.