Gold: Technical Reversal Here Could Spark a Selling Spree

Published 11/12/2024, 07:48
XAU/USD
-
GC
-

Gold Futures are teetering at a pivotal juncture, trading just shy of the crucial $2760 resistance level after staging a sharp reversal this week. Geopolitical tensions in the Middle East have escalated following the overthrow of the Syrian government, raising questions about the region’s future and Iran’s waning influence.

Despite the rally over the past three sessions, market sentiment remains cautious as gold hovers near a two-week high. Traders are watching closely to determine whether the momentum can break through resistance or if exhaustion will take hold.

To navigate this critical moment, I’ve analyzed gold’s technical formations across multiple timeframes to uncover key levels of support, resistance, and potential targets for traders.

Daily Chart Insights: A Reversal at Crossroads

Gold’s bullish reversal began on December 6 with the formation of a bullish candle, followed by a series of three inside-up patterns. This momentum pushed gold futures higher, but today’s session signals potential weakness as the price nears its November 25 high.

Notably, gold futures experienced a sharp decline on November 25 after testing these same levels, leaving behind a large bearish candle. The current price action suggests a similar scenario could unfold. Today’s candle, an exhaustive hammer, indicates fading bullish momentum despite heightened geopolitical uncertainties.

Gold is currently testing the immediate resistance at $2724. Without a sustainable push beyond this level, the rally could stall, leaving bulls vulnerable to further downside pressure.

Key Levels to Watch

To break free of the current range, gold must close decisively above the second resistance at $2760. This move could pave the way for a rally toward the next significant resistance at $2828. However, failure to sustain above $2760 would likely see the metal retreat to test critical support levels.

Gold Futures Daily Chart

The first key support lies at $2700, reinforced by the 50-day moving average. A breakdown below this level could trigger a deeper correction, pushing prices toward $2662.

Strategic Takeaway for Traders

Given the current setup, gold futures appear primed for exhaustion unless they secure a strong breakout above $2760. For traders, this presents an opportunity: any bounce from current levels may serve as a chance to initiate short positions, as the upside appears limited in the near term.

Disclaimer: This analysis is based solely on technical observations and does not constitute financial advice. Readers should make trading decisions at their own risk. The author holds no positions in gold.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.