Gold markets initially tried to rally during the course of the week, but we continue to see a lot of resistance near the $1800 level. The $1800 level of course is a large, round, psychologically significant figure, and also an area where the 50 week EMA currently sits. By pulling back the way we have, the market looks as if we are ready to go looking towards the $1700 level, possibly even the $1680 level. Because of this, it looks as if the exhaustion shows signs of continuation to the downside. After all, the weekly candlestick from the previous week was an extraordinarily long one, and a closed towards the bottom of the range.
Gold Price Predictions Video 28.06.21
If we break down below this past week’s candlestick, then I think we will have to test that support level. If we do break down below that level, then it is likely that the market could go looking towards the $1600 level. In that general vicinity, we have the 200 week EMA which of course is a large indicator that a lot of people will follow. Keep in mind that as money flows into the bond market, it shows that traders prefer to hold paper instead of gold, and it is also worth noting that the Basil III banking regulations go into effect this week, which means that banks will have to hold more collateral for “paper gold”, so that may be part of what is going on here as well.
Nonetheless, it looks like the downtrend continues to see favor with the market, and therefore I think that it is very difficult to buy this market unless we get a weekly close above the $1800 level.
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This article was originally posted on FX Empire
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