How bearish is the recent breakout?
An interesting move in gold on Tuesday as it broke below $1,280 in what could be a very bearish development for the yellow metal.
This has long been a key level of support for gold and some weakness in the dollar this morning isn’t reviving it. That has been the case for some time that a rising dollar has an outsized impact on gold prices compared to when it declines, a key insight into sentiment towards it.
Gold Daily Chart
OANDA fxTrade Advanced Charting Platform
With price having finally broken below $1,280, a more significant decline could be on the cards. As yet, we haven’t moved back above $1280 – in fact, it rebounded off this level early in European hours – which suggests this is no false breakout.
Gold 4-Hour Chart
That could bring $1,260 into focus as the next notable support, with $1,250 and $1,240 of interest below that. How large a decline we see isn’t yet clear, which makes the momentum indicators interesting as we approach notable support zones.
