Technical Sentiment: Bearish
Key Takeaways
- S. Non-Farm Employment, at 248K, blew positive expectations out of the water;
- Smaller than expected Trade Balance, while Unemployment Rate dropped to 5.9%;
- Gold is now on a clear path towards $1,182 and lower.
Gold took a steep dive lower immediately post-NFP, pricing fresh lows for 2014 as the previous metals becomes increasingly unattractive for investors.
Technical Analysis
During the second half of September Gold entered a temporary corrective phase as selling pressure relaxed and dips decreased in size. Despite slowing down, the precious metal failed to attract buyers between $1,207 and $1,220, allowing the downtrend to gradually price in Lower Highs and Lower Lows.
Today’s bearish acceleration triggered a break below 2nd January low of $1,203. This move will most likely have long-term consequences. Taking into consideration both the economical situation and a very bearish technical landscape, bears will likely remain in control as Gold heads for yet another losing year.
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Price is currently flirting around $1,200, a large psychological handle. This level is expected to break as well shortly, since a larger attraction area is located at $1,182.20 (long term double bottom formed throughout 2013 and 100SMA on Monthly Chart). If Gold tumbles below $1,182 as well, the markets could easily repeat what happened after $1,525 broke back in April 2013.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
