Gold rejected from above $1350, could test $1310

Gold reversed sharply after approaching 2018 highs.
The slide from the top of the current range, signals a potential test of a key support.

Matías Salord FXStreet

The yellow metal opened the week with a strong positive tone. It peaked on Wednesday at $1,356/oz but then revered sharply, changing the short-term outlook. From the top lost more than $30 in two days.

Yesterday price bottomed at $1,321 the lowest since March 21. It moved modestly off lows and finished at $1,324 posting a weekly loss of 1.70%. A stronger US dollar was the main driver of the move.

Reversal and a test of 2018 lows?

The retreat from the key resistance area around $1,355/65 signals that price is not strong enough yet to break that area and the wide consolidation range. The last time gold traded above $1,370 was back in July, 2016, and on top of $1,376 March, 2014.

The speed of the decline weakened the short-term technical outlook for gold. It even fell below the 20-day moving average ($1,329). On a wider perspective, it continues to move sideways, unable to break $1,360 while to the downside, $1,310/00 remains a key support.

If the bearish tone persists, a test of the bottom of the range seems likely. A daily close significantly below $1,310 would expose $1,300 increasing the odds of more losses.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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