For gold bugs the weekly chart for the December gold contract makes for dismal viewing, and despite the rally for gold intraday last week as seen on the deep lower wick to the candle, this morning’s early price action seems to have picked up the bearish tone once again, with a gap down open as the precious metal trades at $1220.60 per ounce on the weekly chart.
The potential support platform in the $1238 per ounce area has long since been breached and now offers a very solid barrier for any recovery in gold, and with very light volumes now ahead on the volume point of control histogram to the right of the chart, and move towards the psychological $1200 per ounce area now seems a strong possibility.
Should this be reached then the next pause point in the downwards trend is likely to see gold testing potential support in the $1180 per ounce area. The good news for gold bugs is this may provide some respite as this was the level which saw the development of the rally higher in December 2017. A further crumb of comfort for gold investors, is the volume associated with the last three weeks of trading with the metal falling with falling volume, and is generally a sign the recent bearish selling pressure is diminishing. However, as always caution is required at this time of year as volumes falling also reflects seasonal trading activity, and until we see sustained buying on high volume and price action to match, this bearish sentiment looks set to remain in place for the time being.
