The gold price takes a dive with support levels now in focus

LONDON/NEW YORK (Apr 22)  Gold started the European session marginally higher but that has changed as some USD strength has kicked in. EUR/USD and GBP/USD have been sent lower with gold also suffering as a consequence. Stocks have also been struggling with the main European indices all in the red. Silver is currently over 2% lower and heading toward the $24/oz psychological level.

Back to the technicals on the gold chart. The 4-hour futures chart below shows gold breaking through some decent support zones. Next up is the red line which represents the volume point of control on the volume profile indicator. This zone has been very important in the past so it will be interesting to see how the price reacts there. The main consolidation zone at the bottom of the chart ($1890/oz) is the key area for the bears. If the price does manage to beach the zone there is not too much traffic to the downside and we would need to look at the higher timeframes for support.

If there is to be some support, the black line at $1967/oz seems to be important. A break here could mean a move back into an uptrend is on the cards. It does seem hard to fathom at the moment but time will tell. For the market to confirm a downtrend a lower high lower low needs to be made and that means a breach of the previous wave low. It looks imminent so keep an eye out.

By 07:40am EST spot gold had plummeted $15 to $1,935, while spot palladium nose dived $25 to $2,405.

KITCO