Friday, April COMEX gold settled at 1566.70, down 75.80 or -4.61%.
The move was driven by professional and hedge funds selling as the 2 major players sought to raise cash to meet margin calls and to offset tremendous losses in the stock market.
The gold market posted its biggest weekly decliner since November.
Despite the steep break, the longer-term fundamentals are still Bullish especially if the Fed cuts its benchmark interest rate sooner than expected at its March meeting.
Recall that last Friday Fed Chairman Powell confirmed this when he suggested the Fed would take appropriate action to offset the excessive volatility in the stock market.
The main trend is down according to the daily swing chart. The trend turned down Friday when sellers took out the last swing bottom at 1564.40.
The main trend will change to up on a trade through 1691.70. This is unlikely but due to the break Friday, the gold market may be good for a closing price reversal bottom.
The main range is 1458.50 – 1691.70. It’s Fibo retracement zone is 1575.10 to 1547.60. This zone was tested Friday. Trader reaction to this zone will likely determine the near-term direction of the gold market.
The next move in gold is likely to be determined by how investors react to the Fibo retracement zone at 1575.10 to 1547.60.
If the stock market sell-off continues then look for further weakness in gold. Taking out the Fibo mark at 1547.60 could trigger a further decliner into the uptrending Gann angle at 1531.50.
The angle at 1531.50 is a potential trigger point for an acceleration to the Southside with potential target angles coming in at 1495.00 and 1476.80. The latter is the last potential support angle before 1458.50, the main bottom.
Overcoming the 50% mark at 1575.10 will signal the return of buyers. If this move is able to create enough upside momentum then look for the rally to extend into a pair of Gann angles at 1604.50 and 1627.70.
Gold is likely to continue to weaken if global stock markets continue to break and participants are forced to meet margin calls and cover losses. If conditions calm down, then look for gold to rally because traders will see value at current price marks.
Have a terrific week