Gold's Plunge Under $1730 Will Make Way For $1300-$1500
FxPro Financial Services Ltd | Dec 02, 2021 07:43AM ET
Gold is cruising near the lows of the last four weeks and became heavy with the Omicron news. The series of lower intraday peaks indicates disappointment in the outlook for gold by those players who have been buying it since early October.
Gold's pullback of almost $100 to $1775 has virtually erased the gains since early November but, more importantly, pushed the price below significant technical and psychological levels.
Since Nov. 23, gold has been moving closely around the 50- and 200-day moving averages, and it was in perfect balance for a few days, closing the day near the opening levels. However, by the end of the month, the bears seem to have become the dominant force.
On the fundamental side, hawkish Fed rhetoric is playing against gold, setting up for a quicker QE rollback and rate hike, reducing interest in gold as insurance against inflation getting out of the central bank's control.
It's worth assuming that the local bearish momentum on gold will stay with us in the coming days, opening the potential for a drop to $1730 or even $1680. At those levels, the task of bears will be much more challenging because there is strong support that the bulls managed to defend for the last nine months.
A consolidation under $1730 would strongly signal that the situation went beyond the pullback after the two-year growth and consolidation before a new growth wave. A failure at $1680 would be a tell-tale signal in this case.
That turn of events would be a clear indication that 2020-2021 is the same for gold as 2011-2012, which saw a peak for many years ahead, and it opens the road down to the area of $1300-1500 in the coming year for gold.
Alternatively, the ability to quickly return above the critical moving averages to sustained growth would cause a pullback and consolidation from the current situation, followed by a new spurt to $2600 in a year.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.