Gold prices lifted modestly after falling to an more than one-week low in early European dealings. The safe haven has faced a major sell-off breaking solid supports at the psychological $3300 level. Yet this region marks an important psychological barrier. Additionally, it coincides with the daily Kijun-sen and the daily cloud top, creating a critical level for traders to watch.
Gold also faced significant pressure in the $3300 area. Nevertheless, it opened a new bullish recovery and broke an early resistance at $3324. This timeframe is the same as the daily Tenkan-sen and acts as another important barometer for overall market sentiment. Market experts suggest that for the bullish trend to persist, gold prices must close comfortably above $3324. If gold can manage to claw itself up this soon, the potential gains are even larger.
The next big level of gold to overcome is the upper pivot at $3348. This latter level is the 50% retracement level of the most recent drop from $3403 to $3293. Traders will be looking at this level very closely. If so, is it likely to be surpassed, meaning this would just be a temporary bump before confirming a stronger recovery trend. Yet day after day my research shows excessive erosion of the bullish momentum underlying gold, threatening its immediate validity.
The daily cloud top at $3280, reinforced by the daily Kijun-sen. As long as gold prices remain above this zone, it can offer strong support for gold prices. Gold resistance levels are $3335, $3348, $3361, and $3377. Conversely, important support levels lie at $3295, $3280, $3245, and $3200.
If gold does breach this important $3300/$3280 area, it would likely do so at considerably foreshortening the near-term structure. The next lower supports are $3245 and $3200, a breach of either could send prices tumbling further down. This decline would pose additional obstacles for gold bulls.
Market participants keep a wary eye as they make their way around these important lines in the sand. They’re aware that traders will be looking for signals to determine their next step. An inability to hold support beyond these key levels might be the first indication of a bearish mood taking hold in the market. On the flip side, gaining a strong basis above $3324 might renew aspirational impulse.