Talking Points:

- Gold previously drove above $1,300 as USD-weakness showed-up after Non-Farm Payrolls earlier in the month.

- That theme of Gold strength came unraveled this week as USD-strength showed-up following last week’s CPI report.

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In our last article, we looked at Gold prices slipping back-below the $1,300 psychological level after bullish drive showed-up on the heels of the October NFP report. That print saw an abysmal number of -33k, and this led to a continuation of the USD-weakness that had become so commonplace in the first three quarters of the year. In short order, prices ran from a low just above $1,260 to a high above $1,305; but as we had written on Monday, if buyers were unable to hold support above the key figure of $1,300, a bearish retracement was likely around-the-corner. That’s what showed for most of this week as prices moved down to find support around the Fibonacci level at $1,278.76.

Gold Daily: Current Support at 61.8% Retracement of July-December, 2016 Bearish Move

Gold Prices Fall Back to Fibonacci Support as USD Re-Approaches Highs

Chart prepared by James Stanley

In our previous article, we looked at down-side targets at $1,296, $1,289, $1,284 and then $1,277.83; all of which have cleared. We had also mentioned that for bullish approaches, traders would likely want some element of a higher-low to show in order to confirm the potential for that theme’s attractiveness. That hasn’t happened yet, and this leaves Gold prices in a rather unworkable spot as we approach the weekend.

For next week, traders can look for a break of near-term support around $1,278.76 to open the door to for bearish continuation. Down-side targets can be cast towards prior points of swing-support at: $1,275, $1,267.50, $1,261, $1,254.06 followed by another run at the $1,250 psychological level. The prior swing-high around $1,291 obviates the bearish stance, and opens the door to the possibility of top-side setups as a re-test of $1,300 would appear likely.

Gold Prices Fall Back to Fibonacci Support as USD Re-Approaches Highs

Chart prepared by James Stanley

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

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