For gold investors, it’s been yet another dismal week, with Wednesday's wide-spread down candle on high volume picking up bearish momentum once again, which was marginally halted in Thursday’s minor rally -- a rally that lacks both conviction and, more importantly, volume.
The most significant aspect of the daily chart is now the volume point of control itself – the yellow dotted line – which is firmly in sight at the $1096 per-ounce area and, given its proximity, we can now expect to see gold move into a consolidation phase with the price action oscillating in this area. If the precious metal breaks through the VPOC and away to the downside in due course, it will signal that the next leg of the bearish phase has begun, with the transacted volume at the VPOC adding further pressure for a deeper and more sustained move lower for gold. In that scenario, gold is then likely to test $1075 per ounce where a low-volume node awaits.
For gold investors, therefore, $1096 is key and must hold.
By Anna Coulling – charts from Quantum Trading and NinjaTrader