If You Like Gold, Watch This Level Closely - Analyst
(Kitco News) - Gold prices are under pressure again as the U.S. dollar regains momentum, however one analyst is not ready to throw in the towel just yet.
Instead, he is watching one key support level before he makes any major forecast.
“Holding above $1,280.20 could breathe some life into the gold market,” noted James Hyerczyk, publisher of The Pattern, Price & Time Report, on Wednesday.
“But any rally is likely to be labored because of a pair of 50% levels at $1,285.60 and $1,286.80 and a steep downtrending angle at $1,292.40.”
After trading above $1,300 an ounce earlier in the week, gold has fallen under pressure. However, prices remained above daily lows. December Comex gold futures last traded at $1,283.20 an ounce, down 0.23% on the day.
“The main trend is down according to the daily swing chart. Momentum has turned back down after rallying against the trend for six trading sessions,” Hyerczyk said.
However, there is still potential for the metal to make a comeback, as long as that key level holds.
“The main trend will turn back up on a move through $1,308.40,” he said. “Taking out $1,280.20 will be a sign of weakness, but a failure to hold the uptrending angle at $1,278.80 could trigger an acceleration to the downside with the next three targets coming in at $1,270.80, $1,268.90 and $1,266.80.”
However, as Kitco’s senior technical analyst Jim Wyckoff pointed out in his PM Roundup, gold bears may now be “exhausted.”
“After seeing selling pressure for most of this week, the metals bears may now be exhausted on a near-term basis,” Wyckoff said.
“Still, the gold and silver bulls need to step up and show some power yet this week, or face the prospect of serious near-term chart damage being inflicted,” he added.