Thursday's Market Minute: Gold's Unhappy New Year

Gold futures have taken a beating since the beginning of the year, with /GC contract down more than 12% since Jan. 5. Since that time, /GC has fallen below most of the commonly followed moving averages in rapid succession and briefly traded below the 1700 level yesterday. This should be familiar (and perhaps unwelcome) territory for gold traders, as the yellow metal spent much of the time from April to June of last year bouncing around near this 1700 area.

From a technical standpoint, there’s not much encouraging on the charts for bulls. The RSI fell below the oversold level yesterday, which is typically a bearish sign, and the ADX continues to rise, which suggests a strengthening downtrend. However, this time around the 1700 level happens to coincide with the yearly two Standard Deviation Channel’s lower level, which could be a key point to watch for support.

If prices start to rally, watch for the RSI to cross back above the oversold level, and also keep an eye on the zone between the 21-day Exponential Moving Average (near 1778) and the 252-EMA (near 1792) as a likely resistance point.

Photo by Jingming Pan on Unsplash