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Gold Prices Continue Tumble into Deeper Support

Gold Prices Continue Tumble into Deeper Support

2017-05-09 16:30:00
James Stanley, Strategist
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Talking Points:

- Gold Prices have been unable to catch a lasting bid, extending the down-side run into yet another support zone.

- Last week’s FOMC announcement catapulted Gold prices below the $1,250 support level, and follow-thru price action broke through $1,234 and $1,225. Price action is currently sitting in another confluent support zone between $1,215-$1,219; but will this be enough to stem the rampant declines?

- If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our IG Client Sentiment.

In our last article, we looked at the continued bearish move in Gold prices as the Yellow Metal furthered its already rather steep drop. At the time, the $1,250 support level was sitting underneath price action as another FOMC rate decision neared. But at that rate decision, the Fed appeared unmoved by a recent slowdown in U.S. data, incorporating the term ‘transitory’; which was largely inferred to mean that the Fed is still on track for their goal of three rate hikes in the calendar year of 2017.

The near-immediate impact to Gold prices was a plummet through that prior support level at $1,250; followed by another brief iteration of support at the $1,225 level. After this weekend’s French elections, we saw a quick move-higher after a gap-down; but sellers merely used this to re-load short positions, which brought an eventual break of $1,225.

Gold Prices Continue Tumble into Deeper Support

Chart prepared by James Stanley

At this stage, the bearish move in Gold prices is fast approaching an up-ward sloping trend-line that can be found by connecting the February low to the March low. The projection of this trend-line runs directly into a confluent batch of support between $1,215-1,219.

Gold Prices Continue Tumble into Deeper Support

Chart prepared by James Stanley

For those looking to add bearish exposure to Gold prices, there are two ways of moving forward. For those looking at a more conservative approach, they can await a re-test of one of those prior support levels as new resistance for trend-side continuation entries. For those that would be open to a more aggressive stance, a deeper support-break could also be usable; as the current confluent zone of support could be re-assigned as resistance should price action break-below this trend-line. On the chart below, we look at a series of levels that could be usable in the effort of finding the ‘lower-high’ in Gold prices.

Gold Prices Continue Tumble into Deeper Support

Chart prepared by James Stanley

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

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