Friday saw the price of gold close at $1,484, down -14% from the recent high of $1,704 made earlier in March. Price has fallen below the 38.2% Fibonacci retracement level and is currently testing horizontal support at $1,450, which stems from a price peak made in July 2019 and then tested and held as support in November 2019.
This recent test of horizontal support is being backed up with added support at the 50% Fibonacci level which rests at $1,435. The 50% fib level represents the midway point between the August 2018 low and March 2020 high. A hold and bounce here would be a bullish 50% retracement which are historically good pullback levels to buy in Fibonacci retracements and usually indicate bottoms in price before the next advance occurs.
Should price fail to hold at horizontal support and the 50% fib level, the next levels of support to watch for and expect price to reach are the 61.8% fib level and the diagonal support trendline between $1,372-$1,400. A hold there would be critical as a loss of diagonal support and 61.8% fib level would indicate that the recent uptrend in price is likely switching back to a bearish price trend.
Gold has seen weakness during the recent global market selloff as traders and investors are forced to sell better performing assets at a gain in order to meet margin requirements in other losing positions. Gold saw a +50% gain from August 2018 to the March 2020 high, and is currently up +26% from the 2018 low.
The short-term view on gold remains bullish until/unless the 61.8% fib level is taken out at $1,372. All pullbacks in gold above that level should be viewed as bullish, especially with global central banks around the world increasing their money supplies at a record pace which will increase inflationary pressure on the price of gold to rise as traders and investors return to the safehaven asset in fear of the devaluation of their respective currencies.
This recent test of horizontal support is being backed up with added support at the 50% Fibonacci level which rests at $1,435. The 50% fib level represents the midway point between the August 2018 low and March 2020 high. A hold and bounce here would be a bullish 50% retracement which are historically good pullback levels to buy in Fibonacci retracements and usually indicate bottoms in price before the next advance occurs.
Should price fail to hold at horizontal support and the 50% fib level, the next levels of support to watch for and expect price to reach are the 61.8% fib level and the diagonal support trendline between $1,372-$1,400. A hold there would be critical as a loss of diagonal support and 61.8% fib level would indicate that the recent uptrend in price is likely switching back to a bearish price trend.
Gold has seen weakness during the recent global market selloff as traders and investors are forced to sell better performing assets at a gain in order to meet margin requirements in other losing positions. Gold saw a +50% gain from August 2018 to the March 2020 high, and is currently up +26% from the 2018 low.
The short-term view on gold remains bullish until/unless the 61.8% fib level is taken out at $1,372. All pullbacks in gold above that level should be viewed as bullish, especially with global central banks around the world increasing their money supplies at a record pace which will increase inflationary pressure on the price of gold to rise as traders and investors return to the safehaven asset in fear of the devaluation of their respective currencies.