Gold prices deteriorate on lack of headline risk

Gold Technically Breaks Down Below $1,300, More Downside Likely

Bullion.Directory precious metals analysis 15 July, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

Market participants are beginning to worry about the rapid price deterioration. A trader in Singapore said “What is worrying is that even with the $30 price drop [yesterday], there seems to be no real increase in physical buying. That could also add pressure to prices.”

With risk assets being supported by global central banks, the need for safe-haven assets has been reduced to event risk.

Gold closed, yesterday, below the retracement target of $1,333 per ounce and closing within the demand zone of $1,306 and $1,311. However, technical selling continued today as traders took the futures market through $1,300 and below the key daily 200 exponential moving average (EMA).

A close below $1,300 would signal continued weakness for gold. Minor price action support can be found at $1,288/91. If compromised, a move lower to $1,260 per ounce is likely.

Gold will see resistance near broken support at $1,307, while additional resistance can be found at the important 200 EMA near $1,312.

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