Gold futures sold off sharply once again yesterday, with the precious metal plunging through the $1300 per ounce level, to close the trading session for the December contract with a wide spread down candle shedding $14 per ounce on the day. The latest fall came against the backdrop of a failure to breach the $1330 per ounce region of price resistance, clearly defined on the chart with the red dashed line. This is a deep level which was also the barrier to the recovery in April.
Volume too, is confirming the bearish picture, with rising volumes over the last three days and coupled with the deep upper wicks to the candles of the last week, this is adding further negative sentiment for longer term gold investors. The metal is now approaching a key level of potential support in the $1287 per ounce region, and if this is breached, then expect to see further downside momentum for gold in due course, and a deeper move towards the next level below at $1262 per ounce. As always, after such a fall, expect a bounce today helped with some short term weakness in risk assets.
By Anna Coulling