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Technical Analysis of Gold

Gold fell hard in the past two sessions breaking below the substantial support at 1.650, after the Fed’s recent acknowledgement of improvements in the US economy and the lack of reference to further quantitative easing on Tuesday, with the positive sentiment towards the greenback pushing the US Dollar index above 80.00. From a longer term perspective, the gold market is in a massive uptrend, but since August 2011 sharp declines have been a matter of minutes for the precious metal. From a technical point of view, the bears seem to be in full control on the daily chart, with the MACD signal line flipping under zero, the RSI moving towards the 30 line and the bearish alignment of the moving averages This morning some profit taking has been pushing the precious metal hgiher to the 1.650 level, with the US Dollar index retracing from the high of 80.66 back to 80.41, however the picture on the hourly chart remains bearish, with the market holding firmly under the 89 SMA and the crossover of the 20EMA below the 50EMA favouring short positions in gold with strong short term support by 1.600. Should that level be broken that could open the way for the next massive support level at 1.543. In the alternative scenario, a break above 1.650 could call for a retracement back to 1.722.
Daily Chart

Hourly Chart

Dafni Serdar
Market Analyst
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