The gold futures market has suffered a very intense heart attack these past two trading days. Between Friday and today, the yellow metal has fallen from a Friday high of $1560 to a Monday low of $1385 per ounce.
In previous episodes when gold has fallen more than 6% in two trading days, we have seen a follow up of either sharp rebounds or a period of consolidation. Given the forcefulness of the move over the last couple of days, one would think that some correction may be in store ahead. However, given the damage to the market sentiment, the yellow metal would have to work much harder to rebuild trust.
TECHNICALLY SPEAKING
The price of the gold futures contract has fallen very sharply and now we have to see if it can hold the $1,300 level on GC or $126.85 on GLD.
As I’ve mentioned in a previous analysis, each time we approach the center line on the MACD indicator on the daily chart, the price tends to lose steam. This has happened once again.
BOTTOM LINE
Bull traders should exercise caution and patience to see if the above level holds. A solid and lasting bottom needs to be formed before one can decide to re-enter the market.
