Gold Weekly Technical Outlook

Gold decline accelerated sharply last week through 1500 psychological to close at 1476.1, even below 1478.3 medium term support. Outlook is not looking good. Initial bias will stay on the downside this week and deeper fall could now be seen to next key support level at 1400, which is close to long term projection level at 1398.3. On the upside, break of 1539.4 resistance is needed to signal short term bottoming or outlook will stay bearish in gold.

In the bigger picture, last week's acceleration in this stage of fall is raising the chance that fall from 1923.7 is a long term down trend and is far from being over. Close attention will now be paid to 38.2% retracement of 681 to 1923.7 at 1449.0. Decisive break there should at least bring medium term fall to 61.8% retracement at 1155.7 and below. On the upside, break of 1616.5 is now needed to indicate medium term reversal or outlook will stay bearish.

In the long term picture, the break of 1478.3 support now raised the chance of long term reversal. Q2 and Q3 will now be critical gold. Further downside acceleration will send gold through 55 months EMA (now at 1383.6) decisively. And in that case, we'd likely see long term decline back to 681/1033.9 support zone. Meanwhile, strong rebound from the 55 months EMA will turn gold into sideway pattern instead.

Comex Gold Continuous Contract 4 Hours Chart

Comex Gold Continuous Contract Daily Chart

Comex Gold Continuous Contract Weekly Chart

Comex Gold Continuous Contract Monthly Chart

16/04/2013

The XAU/USD pair had an interesting week, as prices finally broke below the 1532 support level which was the bottom of a giant consolidation zone. Gold prices had been running in this rectangle more than 80 weeks. As a result, breaking below the support zone that has been holding this market up since September 2011 triggered a sell-off during the Friday session. The pair traded as low as 1480.04, a level not seen since July 1, 2011. Although this is an extremely bearish situation which indicates a major correction might be on its way, it is possible to see a bounce before heading low. Technically speaking, when a strong support (or resistance) line is broken, the market may respond and retest it before continuing the trend. Such pullbacks could provide nice selling opportunities in this market.

If the bears continue to dominate gold prices, based upon the measurements, my short-term target will be the 1446.50 level. On its way down, expect to see some support at 1478 and 1473. In the long run, I think the ultimate goal for the bears will most likely be 1325 and 1266. As for buying, I can't see any technical or fundamental reason to do so. Prices are below the Ichimoku clouds and we have bearish Tenkan-sen (nine-period moving average, red line) - Kijun-sen line (twenty six-day moving average, green line) crosses on all time frames. It seems that gold prices will remain under pressure amid expectations the Federal Reserve will end its asset buying program some time this year. If the pair finds support at these levels and turns north, there will be resistance at 1500, 1513 and 1532.50.

12/04/2013

The XAU/USD pair (Gold vs. the American dollar) closed the day slightly higher than opening as the lowest prices since last summer attracted some buyers yesterday. However, better-than-expected data out of the U.S. limited the shiny metal's gains. Data released by the Department of Labor showed that the number of Americans who filed for unemployment insurance payments for the first time decreased by 42000 to 346000, pointing to further improvement in the labor market. Recently the pair has been trying to build some type of base just above the 1554 level but charts don't show any real bullish momentum. Major equity markets continue to rally and USD/JPY is approaching to its highest level since May 2009. From a technical point of view, I think a weekly close under the 1554 level will be highly negative for the pair since we are currently trading below the lowest settlement price since mid-2011.

If the bulls fail to defend this critical support and we end the week below that level, speculative selling pressure would increase drastically. If that is the case, I will be looking for 1546.50, 1540.10 and 1532. To the upside, the first challenge will be waiting the bulls at 1568. If prices break above this level, we could possibly see the bulls make a run for the 1574 level which happens to be the top of the Ichimoku clouds on the 4-hour time frame. A close above the 1574 resistance would signal that the pair is most likely headed for the next strong resistance levels at 1583 and 1590.