Gold gave up all its previous day’s gains, closing at 1285.00 overnight, as the U.S. dollar and stocks strengthened overnight. This marks the 4th successive failure of gold to close above 1290.00 in a row and the price action will be disappointing to gold bulls, with the street appearing to be in position squaring mode ahead of the Jackson Hole Symposium.
A deeper correction in the short term cannot be ruled out although in the bigger picture gold’s price action remains constructive.
Gold is trading slightly lower in Asia at 1283.50. Initial support will be found at 1280.00 but it is the 1278.00 level that traders will be watching. This is trend line support dating back to early July. A break of this level could imply a deeper technical correction is on the cards to the 1267.00 region.
After the spike on Friday to 1301.00, gold has marked out three consecutive lower daily highs. From a technical perspective gold now needs to see a daily close above 1301.00 to reinvigorate its upward trend.