How bearish is the recent breakout?
An interesting move in gold on Tuesday as it broke below $1,280 in what could be a very bearish development for the yellow metal.
This has long been a key level of support for gold and some weakness in the dollar this morning isn’t reviving it. That has been the case for some time that a rising dollar has an outsized impact on gold prices compared to when it declines, a key insight into sentiment towards it.
Gold Daily Chart
OANDA fxTrade Advanced Charting Platform
With price having finally broken below $1,280, a more significant decline could be on the cards. As yet, we haven’t moved back above $1280 – in fact, it rebounded off this level early in European hours – which suggests this is no false breakout.
Gold 4-Hour Chart
That could bring $1,260 into focus as the next notable support, with $1,250 and $1,240 of interest below that. How large a decline we see isn’t yet clear, which makes the momentum indicators interesting as we approach notable support zones.
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.
Craig Erlam
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