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Gold prices have fallen back under the important $1,680 after the yellow metal saw renewed selling due to safe-haven demand for the greenback due to a number of factors.
With the inverse relationship gold shares with the US dollar index it is possible that further downside lay ahead. This is especially so if we see the US dollar index cracking the 115.00 level.
Traders should be very cautious towards this recent price decline under the $1,680 level while it remains, and gold starts to stabilize under this key former breakout zone.
Going forward I expect that the US CPI report will dictate the state of play for gold. Should we see a strong CPI number it is possible that gold is going to head back towards the lows of the year.
I would also suggest that gold has been sensitive to geopolitical news. Gold has been under pressure on bearish Ukrainian war news because the greenback has again benefitted from safe haven flows.
Current sentiment metric towards gold shows that sentiment has remained the same since last week, which could hint an eventual bearish breakdown in the price of gold.
The ActivTrader market sentiment tool shows that 54 percent of traders are bullish towards gold. Going forward, we really need to see a negative bias by retail to help the chances of a sustained recovery.
Current sentiment metrics may make do not make it difficult for gold price to rally, especially with this key tech levels now broken.
Gold short-term Technical Analysis
According to technical analysis gold the price of gold has moved back towards the middle of the range on the four-hour time frame.
According to technical analysis gold is now trapped in range trading between the $1,610 and $1,730 resistance levels. The $1,680 level is the natural pivot.
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Gold Medium-term Technical Analysis
The daily chart shows that the yellow metal fast broken from a falling wedge pattern. These type of price patterns are known to be amongst the most bullish reversal patterns.
Looking at the bullish pattern and the fact gold is in bear market, at a very minimum, we could see the price of gold moving the $1,25 level, or even higher around the $1,820 towards its 200-day moving average if the wedge is broken.
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