Gold Faces Near-Term Headwinds, Bears Eye Break Of 1,480

A stronger USD, prompted by the Trump probe, has seen metals under pressure with gold shedding over -1.8% by the close.

A stronger USD, prompted by the Trump probe, has seen metals under pressure with gold shedding over -1.8% by the close.


Whilst prices have remained supported above 1,480 the potential for near-term weakness seems apparent, given yesterday’s 2-bar reversal. Eagle-eyed candlestick traders could note that yesterday’s bearish bar doesn’t quite pass as a bearish engulfing or outside day. Yet the -1.8% decline was the 2nd most bearish daily range this month and marks a prominent lower high, a scenario discussed two weeks ago. “…given the levels of support nearby [1,480], a minor bounce could materialise and form a lower high, ahead of breaking below $1480”. Furthermore, a bearish divergence had been forming with RSI since late June to warn of weakness to the trend, although prices need to break beneath 1,480 to confirm a reversal.

  • Ultimately, the daily trend remains bullish above 1,480, so bulls could hold out to see if a higher low is formed or seek to buy dips above this level.
  • Bears could seek counter-trend setups whilst the 1,535.69 high caps as resistance and target 1,480
  • Alternatively, bears could wait for a break below 1,480 to confirm a head and shoulders top, If successful, the H&S projects an initial target just above 1,400


We also note that the S&P500 and USD/JPY have printed 2-bar bullish reversals above support zones. Whilst we won’t claim it to be a true risk-on signal, that is coincides with the bearish candle on gold adds credence to the argument that gold could face headwinds over the near-term. So traders would do well to also monitor these markets alongside gold for a full picture to the dynamics (ie, USD/JPY reversing could be a warning for gold bears that downside may be limited).


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.