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Gold Corrects Dropping Back To 1222 After Strong Rally

ByGoldTradingExperts.com
Published 10/15/2014, 07:04 AM
Updated 07/09/2023, 06:31 AM

LONG TERM TREND: BEARISH
INTERMEDIATE TERM TREND: NEUTRAL/BEARISH
SHORT TERM TREND: NEUTRAL
VERY SHORT TERM TREND: BULLISH

Since gold bottomed at 1183 last Monday, the price has moved up by well over $50 on the back of tumbling equity markets and a sharp correction in the dollar. However the dollar has found support just below 86 and weak data from Europe has rekindled buying interest in the greenback.

Gold has corrected this morning, dropping back to 1222 after a strong rally. We expect the current rally to trace out an ABC correction before the down trend resumes, taking the price of gold back to 1180 and most likely below this level, with our long term 1000 target coming into play.

Whilst equity weakness is supportive for gold, a fully fledged crash would see gold holdings liquidated as panic spread to all markets, however this effect would be temporary and provide a good opportunity to open long positions at much lower levels.

Support can be found at 1222, 1217, 1203-1205, 1200 and 1180-1183. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - the failure to break the 65 week MA and the break down of the triangle pattern on the daily chart makes this scenario much more likely, particularly as gold has now reached and tested this crucial support level.

Resistance can be found at 1234-1238, 1242, 1257-1258, 1263, 1271-1273, 1277, 1290-1292, 1300-1302, 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354 and 1392-1395. A second failure to break through the key 65 week MA confirms that the intermediate down trend is intact and a retest of 1180 suggests a break of that level is likely.

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