Gold poised for further descent

<p>Gold (daily chart shown below) continues to carry a substantial bearish bias after having dropped significantly in the past seven weeks to hit a 2014 […]</p>

Gold (daily chart shown below) continues to carry a substantial bearish bias after having dropped significantly in the past seven weeks to hit a 2014 low around 1206 late last week.

Not since the very end of 2013, when the price of gold completed a double-bottom pattern around the 1180 support level, has it declined to such an extreme low. Prior to that double-bottom formation, the last time such depths were reached was three years earlier in 2010.

Having plunged below a large triangle consolidation pattern four weeks ago, the precious metal continued its bearish momentum to drop below 1265-area support and then the 1240 level that was the most recent major low hit in June.

2014-09-29-Gold

Lending to the bearish technical picture is the fact that the 50-day moving average crossed decisively below the 200-day moving average in early September, a condition that has not occurred since the beginning of 2013.

Currently consolidating its decline just above its recent lows, gold continues to show a strong bearish bias. The next clear technical target resides around the noted 1180-area double-bottom low, followed closely to the downside by the 1145 area.

Key upside resistance within the current bearish trend tentatively resides around the noted 1240 previous support level.

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.