Will gold prices break the next important support level?
Yahoo Finance - Mar 11, 2015
Looking at the trajectory of gold prices for April futures contracts, we see the emergence of a symmetrical triangle within a downward channel. The appreciating dollar is hitting gold prices hard, edging them down toward new weekly lows. On March 5, 2015, prices settled just below the previous key support level of $1,200 per ounce.
Market sentiment on gold is weak. The next important support point for the precious metal is at $1,192 per ounce. If prices breaks this support level, current momentum could push gold even as far down as the next support level of $1,186 per ounce. Prices hit this mark multiple times already in both December 2014 and January 2015. Bullish traders, meanwhile, could see resistance at $1,200 and $1,220 per ounce levels.
Based on the gold price chart above, traders could go short if the symmetrical triangle breaks down below current levels and hits a target between $1,192 and $1,180. According to the channel, gold prices could trade between $1,180 and $1,220 levels in the short term. The relative strength index and the MACD (moving average convergence divergence) suggest gold could move sideways, making lower highs and lower lows. As always, the trend we’re seeing now could change with new developments on the macro front.
Falling gold prices make gold ETFs including the Market Vectors Gold Miners ETF (GDX) and the iShares Gold Trust (IAU) vulnerable. Plunging prices also negatively affect gold stocks including Barrick Gold (ABX), Newmont Mining (NEM), and Anglogold Ashanti (AU). Respectively, these stocks account for 8.64%, 7.48%, and 4.37% of GDX.
