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Gold Prices Gap-Lower Following French Elections

Gold Prices Gap-Lower Following French Elections

James Stanley, Contributor

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In our last article, we looked at Gold prices holding support as we approached the weekend with French elections looming just around-the-corner. Just a week ago, Gold prices set a fresh five-month high, extending the rally that had started after the Fed’s March rate hike. But price action ran into a longer-term descending trend-line, and given the event risk on the horizon, there was little motivation for bulls to prod prices-higher beyond that level of resistance.

This weekend’s French elections saw Emmanuel Macron and Marine Le Pen advance to the next round, with the vote to be held on May 7th, 2017. The immediate market impact was one of exuberance as soon as trading opened for the week, as risk-on rallies sparked around-the-world. Equity markets throughout Asia and Europe are up briskly on the morning, and Gold prices have moved-lower as risk appetite has seen ‘save haven’ bets leave the market.

Gold prices dropped down to the ‘s2’ zone of support that we were looking at in our last article after holding at ‘s1’ through much of Friday.

Chart prepared by James Stanley

With the lower-lows and lower-highs being seen on the hourly chart, this could open the door for additional weakness in Gold prices’ near-term price action. Given the extreme early stage of this move-lower after a rally that had, essentially taken on two different phases after the Federal Reserve hiked rates in December and then again in March; and traders might want some element of confirmation before looking to chase prices-lower.

For traders looking at short exposure in Gold, credence would need to be given to the continued support showing-up around current levels in the $1,270-range. Traders can look for a ‘lower-high’ below the Friday-high in the effort of controlling risks in a potentially new trend-lower in Gold. If a lower-high does not develop, traders can let prices break-down to further prove continuation potential of a deeper bearish move, after which this current zone of support around $1,270 can be re-assigned as lower-high resistance.

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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