Gold rebounds after sharp plunge to new low

Gold (daily chart shown below) has rebounded back up near key resistance around the major 1180 support/resistance level after having plunged to a new four-year low around 1130 late last week.

Prior to this new low, the precious metal had established a third test of the 1180 support level about a month ago in early October before bouncing. This followed earlier tests of 1180 support in June and December of 2013.


Slightly more than a week ago at the very end of October, gold once again dropped down to 1180, but this time proceeded to break down aggressively below that key support level. The breakdown confirmed a continuation of the long-term downtrend extending back at least two years to October of 2012.

Currently appearing to back off from the noted 1180 level, this time as resistance, gold could potentially begin to target new long-term lows around the 1100 downside support level if it continues trading below 1180.

To the upside, in the event of any breakout back above 1180, the 1200 level should serve as a key resistance level further to the upside.

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Author: James Chen for City Index


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