The Gold price has been under significant pressure since US Election day (where it touched $1334 intra-day) and has just closed its worst month in over three years, having declined 8% in November. Earlier today it tested and then broke the key psychological and technical $1170 level. Should this break be maintained then I would be looking for SHORT positions with an initial Target 1 at $1144 and Target 2 $1120.
The $1170 level represents the 61.8 Fibonacci retracement level from the 2016 high in June at $1375 and a 10 month low for the Gold price. The USD strength during November has added to the decline in the price, together with the tightening of capital flows out of China. Today the London FT reported that China (a major buyer of gold it all its forms) is tightening gold import quotas to prevent USD outflows from the country. Chinese banks will be required to use USD quotas when buying gold.
The RSI and MACD suggest the price is already oversold, however the widening Bollinger bands remain pointing down, the Parabolic SAR, and On Balance Volume suggest further downside potential.
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