Gold Falls Sharply, Testing $1,231.00 Area
Gold has seen a ferocious sell-off worth over $15.00 from over $1,250.00 at the beginning of Asia, all the way down to currently test $1,231.00, level where a strong short liquidation originated following the dovish FOMC last week.
After a massive run in the first 2 months of 2016, the last few weeks has seen sellers stepping up their efforts to cap prices and creating a compression phase/distribution, which serves the purposes for long-held positions to be liquidated and potential shorts to enter the market.
Will $1,200.00 come into focus?
The overstretched rise in gold suggests that some sort of correction lower may be in the cards, for the big players to re-engage in long-side business. On the downside, 1,226.00 is next key daily support, ahead of steeper declines towards $1,210.00 and $1,200.00. On the upside, $1,250.00 remain the key level ahead of $1,270.00.
(Market News Provided by FXstreet)