Gold Falling On Renewed Risk Appetite

$GLD

Gold has fallen sharply at the start of this week after rallying to a sturdy area of resistance at the end of last week.

The precious Yellow precious metal is being pushed lower by a combination of factors, including a stronger appetite for risk assets due to raised hopes over a deal for Greece.

The Greek government has made a new proposal that is seen as a positive step leading to an agreement later this week.

European government bond prices are also rising which is putting downward pressure on yields and in turn the Euro.

The move North by the USD has undermined some USD denominated commodities, including Gold and Silver. Further losses seem likely now for Gold, thought is looks a little oversold in here.

If Greece does default on its loans, and exit the Eurozone, that would boost the appeal of safe haven Gold.

Technically speaking

Gold’s pullback should not have come as a surprise, as it rallied into a strong resistance at 1205 where several technical factors converged. This area was previously resistance, the 200-Day MA, and the 61.8% Fibo retracement mark of the last downswing all converged there.

Gold has dropped from there, taking out support at 1190, in fact Gold dipped below the long-term pivot mark at 1180. Now, the path of least resistance is South. The next Support is at 1165/70 which corresponds with a short-term Bullish trend line, then at 1163, then the long-term 61.8% Fibo retracement mark at just below 1155.

As Gold heads lower it is important to remember that there is the possibility that has already formed a bottom. The price action has created a few “higher lows” and until it created another lower low then I cannot rule out the possibility for a sharp rally at some point in the near future.

In the near term

As long as the price remains below the Key resistance at 1205 will maintain a Bearish outlook. And should the mark be broken at 1205 and the Bearish trend taken out then the next resistance is the May high at 1332/3.