Gold bounces from seven-week low

<p>Gold (daily chart shown below) has declined sharply for more than a month from its late January high around 1307. Since that high, the precious […]</p>

Gold (daily chart shown below) has declined sharply for more than a month from its late January high around 1307. Since that high, the precious metal has fallen by around 9% to this week’s low of 1190.

In the process of this decline, the price of gold has plunged swiftly below the key 1240 level, as well as both the 200-day and 50-day moving averages. It has also broken back down into a large triangle consolidation pattern that it had broken out of in early January.

Gold daily chart

 

Having fallen to a seven-week low earlier in the week, gold has rebounded slightly back above the 1200 level. With major downside support residing around the 1180 level, the current price area could serve as a tentative bottoming stage for the precious metal.

If the price of gold is able to stay above 1180 support, a significant rebound could push price back up to resistance targets at 1240, 1265, and 1300 – above the noted moving averages.

Any breakdown below 1180 support could once again prompt a return to re-test November’s 1130-area multi-year low.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.