Another week and another negative reaction. This has been the third week in a row, when the bulls could not fight back against the bears over who will stay in control of Gold. The precious metal closed in the red every day last week, apart from Friday. Overall, it is pushing lower and continues to trade below the downwards moving trendline, drawn from the peak of 11th of April. The only hope for the bulls could be the fact that the yellow metal looks quite oversold and that there could be a chance for some retracement to the upside.
OUTLOOK (SCENARIO A / B)
There could be a scenario, where Gold makes another small push higher, maybe to test the 1261 zone, from which it could reverse and move lower. We could then start targeting the area near the 1245 level, marked by low of last week. A break below that level could send the yellow metal down for a test of the long-term upwards moving trendline, drawn from the low of the 17th of December 2015, which could slow down the tumble for a bit. The area to watch there is near the 1236 level, which also acted as a strong support zone in mid-December last year. A drop below that barrier could be classed as another sign that investors are moving away from this precious metal.
Alternatively, if the previously mentioned level at 1261 is not able to withhold the price from rising, then we could potentially start aiming for the zones that were tested in the recent past. The first one to watch, after the 1261 level, is the area around the 1273 mark, which is near last week’s highest point. A break above that could send Gold to the 1285 zone, which is not far from the aforementioned downwards moving trendline. For us to become bullish in the longer-term, we would need to see a clear brake and a close above that trendline.
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