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Gold Likely To Fall Below $900 An Ounce
With high volatility in the marketplace, it is more important to pay attention to gold’s price action and what the charts are saying than any potential fundamental factors, according to one award-winning technical analyst.
Clive Lambert, technical analyst at Futurestechs and winner of the U.K. Technical Analyst award for of the best commodity, energy research and strategy for 2015, said the price action on Aug. 24 is probably the best example of how the gold market is not following any fundamental trends, in particular as a safe-haven asset.
“That day the U.S. equities were down 1,000 points even before the open. Gold should have ended the day at least $25 dollar higher but instead it ended in negative territory. I was getting bullish on gold for the first time in a long time, up until that point,” he said.
“Sometimes it’s what the markets don’t do that really defines the price action,” he added.
Lambert explained that gold still remains in a well-defined downtrend and investors should either go with it or remain on the sidelines. He added that he is expecting gold will eventually retest support at $1,090 an ounce and depending on the selling pressure in the marketplace, prices could end up pushing below $900 an ounce.
Lambert added that the big level to watch in the gold market remains the $1,090 level, which represents a 50% retracement from the lows in 2001 to the highs reached in 2011. Because the market was unable to push through $1,286 – representing a long-term retracement level at 38.2%—in the rally from the July lows, Lambert explained that it is more likely price will continue to fall to $893, the 61.8% long-term retracement level.
Along with the long-term retracement levels, Lambert said that he is also watching gold’s 155-day moving average, which comes in at $1,173 an ounce. He added that the gold market needs to break at least that level and move above $1,175 before he starts becoming bullish again.
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