According to the technical charts, gold prices are approaching levels of support. From the reaction of the yellow metal at those levels, traders could determine the market’s short-term direction.
Market’s analysts explain gold’s rally to all-time nominal price highs last Tuesday and subsequent break in price on Wednesday should be considered. The December gold contract set an all-time high of $1,923.70 an ounce on Tuesday, but settled at $1,873.30, under the settlement price of $1,876.90 sett on Friday. On Wednesday, values continued to grind down, with December gold settling at $1,817.60, losing $55.70 an ounce, or 3%.
The close under the previous day’s settlement, combined with a move to an all-time high, is a bearish technical chart pattern known as a key reversal and can warn of changes in direction.
The precious metal exchange-traded funds, along with trusts also have put in a key reversal during the last trading session.
Bullish sentiment had grown stronger in recent weeks, with the last week minor correction not enough to justifuy further significant gains.
The recent activity of the market making a new high, then breaking it and making it and then breaking it all over again, should make investors cautious.
For the short-term market looks bearish, but for the long-term, the bull trend is still intact.
