Gold is selling off again today and looks likely to continue after breaking below $1,100 for the first time in a month.
The yellow metal has already found support at this level once this week and failed to break through. It’s worth noting that 3 weeks prior to it breaking above here on 11 August, this area was strong resistance, which quite often leads towards it being support on the way back down.
If we see a break below here, the next area of support could come around $1,071.80-1,082.50. This was a key area of support between 20 July and 7 August when it hit its lowest level since 11 February 2010.
Below here, the ascending trend line – 14 June 2006 lows – could offer further support between $1,050 and $1,055 depending on if/when it reaches this level.
Another failure at the current support may be an early sign that the bearish pressures are easing. If we see a break above the descending trend line – 24 August highs – this would further support that view as it would appear to break the recent trend and break above prior support and resistance levels.