December gold futures have been as low as $1251.50 so far today. We have known that $1250 would be a big level in the event of a correction; the $1250 area served as resistance on numerous occasions throughout February and April, then it served as support from which a ~$125/oz rally launched following the BREXIT vote. The combination of significant support/resistance, the rising 200-day moving average, and the 38.2% Fibonacci retracement of the entire December 2015-July 2016 rally make today’s low potentially quite significant:
The $1250 area is a likely spot from which an oversold relief rally could begin. However, as Bob Moriarty stated yesterday gold may need to still test down to at least $1200 before a real sustainable bottom is put in place.
Another item of interest which supports the case for a bounce comes in the form of RBC venturing that gold may now be below ‘fair value’ after having seen gold as overvalued for the last several months:
While the trend is clearly down and it is too early to call for any sort of bottom, the $1250 level is certainly quite interesting from both a technical and psychological standpoint and one which investors should pay close attention to.
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