Gold and Brent crude oil prices have fallen again today as traders respond to the receding fears over Ukraine. The yellow metal’s selling has been exacerbated as a result of stop loss orders being triggered below some key technical support levels. As pointed out yesterday, one such level was around $1355. This level has now been broken while a short-term bullish trend line has also been eroded.
At the time of this writing, gold is trading near its lows on the day with a move towards $1325/30 looking increasingly likely. This is where a slightly longer-term bullish trend line meets the previous lows, which makes it another key technical area. Thus there could well be more stop sell orders stacked below this range, which may get triggered if, for example, the Federal Reserve chair Janet Yellen unexpectedly sounds hawkish at her first press conference this evening. But in line with the general expectations, I think the FOMC will trim QE by an additional $10 billion. The recent US economic data releases haven’t been good enough to justify a stronger reduction, while at the same time they haven’t been that bad either to cause the FOMC to pause tapering.
But returning back to the technicals and after three days of sharp falls, the metal does look a little oversold in the short-term. Therefore it could just as easily bounce from these oversold levels.
Source: FOREX.com
Meanwhile silver has also fallen sharply, with concerns over China’s economy further weighing on the grey metal. However it is now testing a key technical area, namely $20.50/60, which, as can be seen on the daily chart, below, had offered strong support and resistance in the past. What’s more, the 50-day moving average also comes into play here, which makes it likely that we will see some sort of a bounce. Having said that, the grey metal has already broken out of a bullish channel and also taken out its 200-day moving average. Thus a potential close below $20.60 today or in the coming sessions could be a very bearish development indeed.
Source: FOREX.com
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