Gold outshined other assets for last few months due to geopolitical tensions and Investor risk off behavior. Safe heaven money flow into Physical gold, gold contracts and Gold ETF caused prices to breakout from long-standing resistance zone 1280 – 1300 (levels based on Comex). As usual, Gold Bugs (Investors and traders who are irrationally optimistic on gold) cheered and proclaimed that gold has bottomed out or At least they thought it has. But gains became short-lived when market participants focus shifted from Geopolitical tensions to FED’s monetary policy! Gold Prices reversed from 1350, wavered its earlier gains that followed the breakout. It’s likely due to Funds and Institutions liquidating some of their positions before FED Meeting.
When we look at the daily chart, we can spot Throwback formation taking place. This pattern often traps and shakeout uninformed breakout traders. It’s likely caused by some big funds seeking liquidity and trying to exit from the market at better price. Throwback is challenging the conviction of buyers; and testing integrity of Bullish sentiment. These traps and volatile false moves are clearly visible on lower time frame.
Can Bulls sustain the selling pressure? Will prices bounce back after hitting major support zones, indicating buyers? We need to see good buying pressure at important key levels to confirm that bulls are still in control. If we see violent selloffs or if price breaks through the support easily then expect bears to take control. Watch the price action for clues and insights.
