The price of gold fell today to its lowest level since early August, hitting a low so far of $1448ish. The metal has therefore reached the technically-important $1450 level that we have been banging on about for the past few weeks, for example HERE. Fundamentally, I think gold prices could be headed higher in the long-term for the reasons I have given in the previous article. Technically, there is still the possibility for further weakness as my colleague Matt Simpson highlighted the possibility earlier in the day. However, if gold were to climb back above the previous month’s low and close there, around $1460, this would create a potential false breakdown reversal pattern. I think there is a decent chance of this happening since the bears have hit their main downside objective at $1450. If this turns out to be the case, then we could see some gains in the days ahead, at least towards the next potential resistance at $1480/2 area. BUT we have to see that reversal candle first – such as those plotted in the inset. A closing break (well) above $1460 would help create such a bullish-looking hammer candle on the daily chart.
Source: Trading View and City Index.
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.