23 Dec 2013
Gold just below flat after last week’s technical breakdown. Lower prices still ahead?
FXstreet.com (Barcelona) - Gold is basically flat for the session as traders will likely be saving any trading for just before and just after key data announcements during this quiet holiday week. Nothing market-moving is due out until US opens up later today.
Traders in limbo after market’s reaction doesn’t match up with Fed’s words
The playbook from last week was to sell gold on a commencement of tapering and accompanying jump in US interest rates. Well, the Fed made the tapering announcement and the markets responded initially with the expected jump in rates and the DXY. However, the rise in rates and the DXY were not enough to conquer their own respective technical resistance levels. With that combination of news and reaction, intermarket traders would understandably be left scratching their heads. Gold traders are able to see less ambiguity in the charts, though – the picture for gold is plain and simply bearish. Regardless of the DXY and 10-Year T-Note yield’s failure to provide direction, gold chose a direction all of its own – lower. Notably, silver futures did NOT set a new low like gold futures did. Thus, it begs the question as to why gold broke down even as silver did not and as the DXY and US yields did not break out to the upside. Reasons put forth by those who may have a worthwhile opinion include technical factors and margin selling.
Technical outlook for gold
Technicians say that if the most bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold may very well see some buying interest at the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at the 12/12 close of 1224.90 and the recent pivot high at 1250.
Traders in limbo after market’s reaction doesn’t match up with Fed’s words
The playbook from last week was to sell gold on a commencement of tapering and accompanying jump in US interest rates. Well, the Fed made the tapering announcement and the markets responded initially with the expected jump in rates and the DXY. However, the rise in rates and the DXY were not enough to conquer their own respective technical resistance levels. With that combination of news and reaction, intermarket traders would understandably be left scratching their heads. Gold traders are able to see less ambiguity in the charts, though – the picture for gold is plain and simply bearish. Regardless of the DXY and 10-Year T-Note yield’s failure to provide direction, gold chose a direction all of its own – lower. Notably, silver futures did NOT set a new low like gold futures did. Thus, it begs the question as to why gold broke down even as silver did not and as the DXY and US yields did not break out to the upside. Reasons put forth by those who may have a worthwhile opinion include technical factors and margin selling.
Technical outlook for gold
Technicians say that if the most bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold may very well see some buying interest at the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at the 12/12 close of 1224.90 and the recent pivot high at 1250.