Gold: $4,275 sets up a make-or-break test for sellers

Olalekan Akinola Independent Analyst

Gold is down over 0.50% this morning, with sellers reversing part of Friday’s post-CPI rebound as markets increase their bets on a Federal Reserve rate hike in early European trading. Gold jumped higher following last week’s US CPI release, but as I noted in my postCPI reaction analysis on Friday, resistance around $4,405 could stall further gains.

Price is now trading around $4,312, after Friday’s high was capped near $4,403 as sellers defended the descending trendline. Gold is also under pressure from a stronger Dollar, with the market-implied probability of a September rate hike rising slightly from 87.3% on Friday to 88.7% at the time of writing.

Price has been trading within a downward channel since the beginning of September, with sellers remaining in control after pushing prices down from $4,698 in late August. Today’s selling pressure has taken price back below the 50-period SMA around $4,350, bringing the lower band of the channel near $4,275 into focus.

It could be a classic make-or-break test for sellers if price reaches $4,275. This level is not only the base of the channel but also a horizontal support that held price on August 10, August 14 and, most recently, September 2. It remains an important level for buyers to defend. A sustained break below it would strengthen the bearish structure and open the door to a deeper decline.

Author

Olalekan Akinola

Independent Analyst

Olalekan Akinola is a financial-markets analyst and writer with five years of experience covering forex, commodities, and global macroeconomic developments.

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