One of the primary reasons investors flock to Gold is due to its perceived safe-haven status. However, this key pillar of support was taken away earlier when the FOMC stated that downside risks to the outlook for the economy and the labor market have diminished since the fall. Essentially, this implies tapering QE may come sooner rather than later, and that the U.S. economic outlook is on sound footing. Bernanke took this point a step further when he said 'it may be appropriate to moderate the pace of purchases later this year.
As a result, the XAU/USD sold off sharply – as did U.S. stocks and bonds on the back of significant USD strength. Gold broke below key triangle support, drawn from the 3013 low, around $1355. This break followed the RSI, which had broken below the corresponding triangle support earlier this week.
Next potential levels of support if triangle break sustained:
$1338 – May 2013 Low
$1321 – 2013 Low
$1300 – Psychological & barrier/option related
$1285 – 38.2% retracement of 1999-2011 rally
Keep in mind that this triangle pattern projects an approximate $165 measure move objective, and while still a long way away, produces a target of $1190 over the longer-term.
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U.S Gold: Psychological Barrier At $1300 Levels
Published 06/20/2013, 07:43 AM
Updated 05/14/2017, 06:45 AM
U.S Gold: Psychological Barrier At $1300 Levels
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