After bouncing off support at 1,356-1,359 many times yesterday and in the past week, the bears pushed the gold price through 1,355 this morning, triggering a wave of stop losses that had accumulated under 1,350.
The price fell as far as the lower boundary of the uptrend channel at 1,340 and so far this level is holding. The price action today appears to be a washout move lower at the end of the ABC correction. However, a break of 1,340 will see a test of the 50 DMA at 1,331 and possibly 1,325.
As the tensions in Syria recede and market participants begin to focus on next week's FOMC meeting, gold has fallen and is now in an area of critical support. A break of 1,325-1,330 will see a retest of 1,300 and 1,280. A break of 1,280 will signal a return to 1,200, and a retest of the June lows. We consider the likelihood of a break below 1,325 to be low and a return to 1,200 to be very low.
Equities remain strong, diverting funds away from gold. However, the dollar remains weak and is capping the declines in gold somewhat.
The price fell as far as the lower boundary of the uptrend channel at 1,340 and so far this level is holding. The price action today appears to be a washout move lower at the end of the ABC correction. However, a break of 1,340 will see a test of the 50 DMA at 1,331 and possibly 1,325.
As the tensions in Syria recede and market participants begin to focus on next week's FOMC meeting, gold has fallen and is now in an area of critical support. A break of 1,325-1,330 will see a retest of 1,300 and 1,280. A break of 1,280 will signal a return to 1,200, and a retest of the June lows. We consider the likelihood of a break below 1,325 to be low and a return to 1,200 to be very low.
Equities remain strong, diverting funds away from gold. However, the dollar remains weak and is capping the declines in gold somewhat.