Gold and Silver, dropped lead by the US Dollar strength as investors turn cautious ahead of the release of minutes from the Federal Reserve’s meeting on Wednesday and monthly US jobs report on Sat.
This week, Gold has failed to continue its appreciating move witness since the beginning of the New Year 2014. Following its wild swing on Monday, the precious metal dropped nearly 0.5% on Tuesday and on Wednesday continued trading lower ahead of the release of closely watched minutes from the Federal Reserve’s December meeting.
As could be seen on daily chart, the metal seems to face strong resistance in decisively moving above its 50-day SMA, currently near $1240 area. The metal, however, continues showing resilience in dropping below 20-day SMA support near $1215 region, nearly tested on Monday.
Should the metal now manage to clear this immediate resistance at 50-day SMA near $1240-1245 zone, it is likely to continue moving higher towards $1275-1280 zone representing 100-day SMA and the upper trend-line resistance of a descending channel formation visible on daily chart.
Alternatively, should it drop back below the 20-day SMA support near $1215 area, the metal could easily drop back towards $1200-1195 horizontal support zone. This could possibly be followed by a drop towards 2013 lows, $1180 mark. Further, should the metal now break through 2013 lows ($1180), it could be vulnerable to further depreciation towards $1150 support level, marked by 61.8% Fibonacci Retracement Level of its 2008 – 2011 big bull-run also coinciding with the lower trend line support of the descending channel
Although, the white metal manage to climb above 50-day SMA resistance but it failed to sustain at higher levels and decisively strengthen above Dec. 2013 high of $20.45. Reversing from its intermediate resistance near $20.50 area, the metal dropped below 50-day SMA on Tuesday and subsequently on Wednesday the losing momentum continued with the price dropping back below 20-day SMA. The metal is now headed to test a very important horizontal support near 19.40 area.
Should the metal fail to hold this immediate support near $19.40 area, it could easily drop to below $19.00 round figure psychological support initially towards retesting its 2013 closing lows of $18.50. The metal, then, seems vulnerable to continue depreciating even below $18.00 mark towards $17.70-17.50 support zone marked by the lower trend line support of a descending channel formation on daily chart.
Alternatively, should it manage to rebound from the very important support near $19.40 area, leading to a price appreciation above 20-day SMA (currently at $19.70) and 50-day SMA (currently near $19.90-20.00 zone), the metal seems to continue moving higher towards 21.00 resistance zone, marked by the upper trend line resistance of the descending channel and 100-day SMA.