Gold Technicals – New 2013 Low Reached, Bearish Breakout Extended

Weekly Chart

Gold prices took a dip yesterday due to the surprise Bernanke’s QE3 ending timeline. This resulted in the strengthening of USD which pushed Gold prices lower. However, price was still able to find support around 1,345 region during Asian hours, and it was only until early European trade that pushed price below the 1,322 low back in April. Current bearish momentum is high and the move seems to be technically driven, especially since Gold prices has been trading lower ever since QE3 has been implemented – which stands to reason that the threat of ending QE shouldn’t affect prices as bearishly right now. However, given the strong bearish sentiment surrounding Gold all these while, it is not entirely surprising to see bears using this opportunity to sell aggressively.

Given such aggressiveness, price may be able to reach 1,250 which was the ceiling back in Jul 2010. Ultimate bearish target may be in the form of 261.8% Fib extension that takes reference from the decline from Sep 2012 to Feb 2013, before current bearish breakout of the original descending Channel.

Traders should also mind the spilling over of USD impact on the rest of the majors. With US stocks expected to continue weakening today, USD will continue to strengthen if the inverse relationship with Stocks remain in play. This would mean lower Gold prices and also lower commodities prices across board in the short-term.

More Links:
EUR/USD Technicals – Trading below 1.328 support as bears take hold
AUD/USD – New 2013 lows on QE Taper, China
US Market Roundup – Back into Channel after Bernanke’s Downer

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