Hey Traders,
Gold has certainly taken quiet a hit lately and has broken some significant support levels, with likely test of another key area after this consolidation with possible slight pullback. There are some factors which negate technicals big time, for instance check out recent Reuters Article
LONDON (Reuters) - Discussion at a summit of G20 world leaders about selling International Monetary Fund gold to raise extra funds refers to sales over and above existing plans, a minister said on Thursday.
“What’s referred to here is in addition to what has been previously,” Treasury minister Stephen Timms told reporters at the summit.
A G20 source said earlier there was a reference in the summit communique to IMF gold sales but “the language had not been firmed up” and it was unclear whether it would be separate from the 400 tonnes of gold the IMF committed to sell last year as part of a broader restructuring of its income.
Timms said he also expected a significant announcement on IMF Special Drawing Rights.
A Russian news agency report said on Wednesday G20 leaders might approve $373 billion worth of IMF SDRs for its member countries. The move could be similar to a central bank printing money to increase the amount of cash flowing through an economy. “The communique will be seen to make announcements about … SDRs, potentially quite a significant announcement,” Timms said. “I certainly expect it to be significant, more than doubling.”
Source - http://uk.reuters.com/article/worldNews/idUKTRE53133820090402Anyhow, here is a look at charts:
golddaily1
On the daily charts gold is right above the little “support valley” of two trendlines and a fib, as pointed out in previous daily analysis it was at extreme oversold conditions not seen since 700 low. Past 3 days were inside day consolidation days, momentum has been reloaded leaving more room for the downside, especially if gold manages to break 850 level. Further consolidation and pullback to 900-908 are is also likely. If 908.75 was to get violated, more bullish scenarios would have to be considered.
Another interesting clue, is that weekly trend on gold is now suggesting that Bearish Trend is in place after closing second consecutive red weekly Heikin-Ashi Candle
goldweekly
Hope it helps
Good Luck and Good Trading to all
Vlad