Gold prices pushed towards 1,200 during US session yesterday, extending the bearish leg that was starting during late Asian/early European session. Price found some support just around 1,200 towards the end of the US session, with a new bearish leg starting during Japan open – breaking 1,200 and reaching a low of 1,180.5 within the 1st hour of trading. This sell off was sparked off by Nikkei 225 which gaped 1.29% higher and drove risk appetite higher. This strengthened USD and nudged Gold below 1,200 – and bears speculators took care of the rest, resulting in the quick movement lower.
Currently we are experiencing the aftermath where the dust has settled. Prices are starting to move back towards 1,200 after the quick speculative move and we will see a key test of 1,200 soon. Should 1,200 is held, we may see yet another bearish leg emerging before the end of the trading week, but should price manage to push above 1,200, it is possible that a bullish recovery may be in play especially if the interim consolidation ceiling of 1,207-1,208 is broken. This does not mean that a full bullish reversal is in play – Long term bears are still ruling with the Channel Breakout still providing overarching pressure downwards (see Weekly Chart), while short-term bears are still exerting pressure unless 1,245 is broken once again.
Nonetheless, the possibility of a decent recovery is good with Stochastic readings and Signal line attempting to push above 20.0. Given the fact that today is the final trading day for the week and for the month of June, there could be counter-trend moves with traders squaring their earlier profitable trades. Couple this with thin liquidity, we could see bullish correction (if any) potentially extending higher.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.