Gold prices remain bearish despite the sudden "risk off" move early US session. The prices do not rebound from yesterday's low of 1236 - around depressions at various times between January 15 to 17, but is also capped below the rising trend line and is currently at 1236 again. Stochastic readings agree with a down cycle signal currently in play, increasing the likelihood of price marking in 1236 before seeing a significant decline.
This gold weakness is in line with the major long-term fundamentals that are not satisfactory reasons for investors to buy gold. However, given that gold was indeed bullish earlier in the week, it is interesting to see how quickly the tables have turned though Hedge Funds / Institutional speculators are said to have bought more gold according to the latest CFTC data . COT numbers this week "will be important that we be able to see whether these institutional traders / investors are still interested in Gold. If the net long positions continue to rise, the probability increases of 1,236 detention, and we could even see a move towards 1255 and beyond (assuming we did not reach 2 levels mentioned before the COT numbers are released) .
Daily Chart
the long-term direction is downward, although prices have broken above the descent Top Channel. The inability to rise above the swing high in December 2013 and remain above 1,250 round figure suggests that we are quite far from any bullish breakout that can bring us closer to 1,300. This opens a back previous swing low in 1182 as a viable long-term target. Certainly, the price can still bounce back from the downward trend line, but given the current bearish momentum and bearish fundamentals, the more likely may be the price straddling Upper Canal lower. If prices trade below Canal Top, we could even see a downward acceleration as bullish downturn that began in late December / early January will be completely invalidated, giving full initiative to the bears. Stochastic readings agree with a down cycle with Stoch levels already below the peak formed in December. The next important level of support Stoch would mark 50.0 seen in September and October 2013. This provide enough space for the price to head lower, but it is likely that the bears find significant support when 1215 achieved.
Links:
GBP / USD - Breaks through resistance at 1.6450
AUD / USD - Pushed to a week high near 0.8870
EUR / USD - Crawls Back au above key 1.3550 level
This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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