Gold – Where Next After Break of $1300 Support?

We’ve seen a big move in Gold in the early stages of the US trading day following what was previously a relatively quiet session in Asia and Europe.

The initial trigger for the sell-off isn’t clear at this stage but it’s likely that the move through $1,300, an important technical support level, triggered a number of stops which quickly intensified the move lower.

Gold Daily

It has since found support around $1,290 and how it behaves in the coming hours could offer important insight into whether we’re dealing with a false breakout or something much more bearish.

A legitimate breakout could prompt a move back towards $1,250, the next major level of support and a level that has been notable support and resistance in the past.

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It may find support along the way around $1,270-1,280 having done so on a number of occasions over the last few years, but having not been key on recent tests, this could just be temporary.

A daily close back above $1,300 today may suggest we’re looking at a false breakout, at which point $1,330 to the upside could be key. The lack of buying action since the breakout would suggest this is unlikely, the 4-hour and 1-hour charts still look very bearish following the break.

Gold 4hr

Gold 1hr

Not only could it find resistance here from the descending trend line but the top of the moving average bands (55 and 89) could provide additional resistance having provided support over the last six months.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.