Gold Price At Important Technical Levels, Analysts Warn Of Renewed Selling Pressure

New York (Sept 7)  Gold prices have rallied more than $50 since bouncing off last week’s lows; however, some analysts are warning that despite the recent gains the prices are facing heavy technical resistance.

The gold market is seeing some consolidation Wednesday morning with prices holding on to most of the 2% gains seen Tuesday, the biggest one-day rally since the Brexit referendum vote in late June.  December gold futures last traded at $1,348.70 an ounce, down 0.39% on the day.

Analysts at iiTrader said in a note Wednesday morning that gold now faces major-three star resistance, adding that the “last time it tested this level the metal struggled to hold ground at $1,360 with only short-lived spikes into the resistance pocket.”

Although gold prices have surged off from psychological support levels at $1,300, Joshua Mahony, market analyst at IG noted that gold is posting lower highs, increasing the risk of a move lower in the near-term. However he added that the long-term bullish trend remains in place.

In his report Wednesday, Mahony said he is watching resistance at $1,357 and then at $1,367.

The $1,360 area represents a long-term retracement level from 2011.

Fawad Razaqzada, technical analyst at City Index warned that although the path of least resistance for gold is higher, the bears are not “dead and buried.”

“They may well show their presence at higher levels or if the metals break back below their key support levels once again. Indeed, the long-term bearish trend line on gold is yet to break down,” he said.

George Gero, managing director with RBC Wealth Management, said that although funds are actively watching the yellow metal closely, it will take a close above $1,365 to encourage them jump into the market.

Source: KitcoNews