Gold gives back modest gains as pressure resumes
James Chen, CMT June 26, 2017 4:08 PM
A large and apparently mistaken sell order in gold on Monday helped trigger a sharp down move that tentatively pushed the price of gold below a key support area. Although the mistake was reportedly reversed almost immediately, damage had already been done. This move was exacerbated by Monday’s rebound in the US dollar, which placed some further pressure on the precious metal.
Meanwhile, stock markets on Monday were mixed but generally remained very well supported as market volatility continued to fluctuate at extreme lows. This ongoing market complacency further contributed to a continued lack of demand for the safety appeal of gold.
Last week saw the precious metal make an attempt at a rebound after spending much of the past few weeks since early June in a sharp decline. The gains last week, however, were relatively modest, and Monday’s drop reversed most of that rebound.
Unless there is a substantial increase in market uncertainty and volatility, or the US dollar begins to fall much further, gold prices are highly likely to remain depressed. Monday’s quick drop pushed gold back down below the key $1250 level and briefly below a key uptrend support line extending back to the mid-December lows, before paring some of those losses. With price currently on the verge of a further breakdown, gold’s prospects currently appear dim. Any such further breakdown below the trend line would help confirm a disruption or even a reversal of this year’s generally bullish trend. In that event, the next major downside target is around the $1215 price area, which represents May’s lows, followed by the key $1200 psychological support level.
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