As we move towards the end of another trading year, the price of gold continues to trade in a narrow range, with bullish and bearish sentiment ebbing and flowing in equal measure. The breakout on the 23rd November was a classic example, with no follow through on the wide spread up bar, with the market promptly selling off sharply three days later, and accompanied by extremely high selling volume on the daily chart. This was duly followed by a change in trend to white, and ultimately to red, with the precious metal pushing lower to test the $1700 per ounce region, a level which has been breached once again in today’s session. Throughout this week we have seen mixed volumes on the daily chart, with yesterday’s narrow spread up bar accompanied by high volume, clearly signaling a weak market, which has duly been confirmed today, with February gold futures now trading at $1696 per ounce.
Moving to the three day chart, the trend here has remained firmly bearish, never making the transition to bullish during late November, and finally reverting back to bearish early in December. The heatmap has also remained firmly bearish since the move lower in late November, and with both trends now bearish, and with the market once again breaking below the psychological $1700 per ounce level, we now look set for a test of the $1675 isolated pivot low of 5th November. Should this level be breached, then expect to see gold prices move lower in due course, possibly to test the platform of support in the $1630 per ounce region in the first quarter next year.
By Anna Coulling