Gold reversed sharply after approaching 2018 highs.
The slide from the top of the current range, signals a potential test of a key support.
The yellow metal opened the week with a strong positive tone. It peaked on Wednesday at $1,356/oz but then revered sharply, changing the short-term outlook. From the top lost more than $30 in two days.
Yesterday price bottomed at $1,321 the lowest since March 21. It moved modestly off lows and finished at $1,324 posting a weekly loss of 1.70%. A stronger US dollar was the main driver of the move.
Reversal and a test of 2018 lows?
The retreat from the key resistance area around $1,355/65 signals that price is not strong enough yet to break that area and the wide consolidation range. The last time gold traded above $1,370 was back in July, 2016, and on top of $1,376 March, 2014.
The speed of the decline weakened the short-term technical outlook for gold. It even fell below the 20-day moving average ($1,329). On a wider perspective, it continues to move sideways, unable to break $1,360 while to the downside, $1,310/00 remains a key support.
If the bearish tone persists, a test of the bottom of the range seems likely. A daily close significantly below $1,310 would expose $1,300 increasing the odds of more losses.