The gold price has found some near term support but how long will it last?
New York (Jun 18) Gold has been looking heavy in the past few sessions following the FOMC meeting on Wednesday night. On the weekly chart below the red zone has been used as a support area. This area was the top of the consolidation zone from April to May 2020 and it does look firm. The issue is the volume on the sell-off. We have had a decent rally since March this year but the volume on the move lower has been higher than every day bar one.
On the downside, if the red zone does break there is another key level at the next high volume node (POC). This level is at around $1734/oz and these levels are like a magnet for price. Beyond that, the next zone is the main consolidation low on the chart and if that breaks there could be some serious bearishness to come for the yellow metal, thankfully the price is quite far away from that point ($1673.3/oz).
It is not easy to say who is in control of this market at the moment. Physical demand could help prop up the prices but one of the world's biggest consumers (India) is offline due to the COVID-19 pandemic. If investors are getting a better yield from another safe-haven asset its obvious to expect a shift in allocation. The question is if it warrants a break of the consolidation low. A break of the trendline and the next POC could be a telling signal.
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