Should Gold Bears Be Worried?

London (April 25)  We broke below $1,280 last week, which was a technically significant breakout and drew attention to $1,260 below it where a prior area of support and resistance crosses with the 200-day simple moving average.

The Good News

The bullish case for gold is not dead, though, despite all of the above. For one, we’ve hardly seen a boost in downside momentum since the break below $1,280 and we saw a second test of this from below on Wednesday. Each new low is quickly bought into, which is often a bad sign.

What’s more, it seems that dollar gains are not weighing too heavily on gold – particularly on Wednesday – while any weakness is getting quite a response to the upside. This could be a worrying sign given the correlation between the two. Perhaps an early red flag for the bears.

All things considered, the downtrend may be weakening, right now, but as long as we remain below $1,280, the key level in gold remains $1,260, a break of which may deliver the momentum we lacked over the last week.

Investing.com