FxWirePro: Gold’s new lows in 5 years – more slumps inevitable ahead of Fed’s rate hike

The precious metal has been losing its shine after tumbling consecutively from last couple of weeks but as stated in our earlier post after breaking all crucial support zones (1096, 1087 and 1070 levels), we are not seeing any sense of bouncing back.

The precious metal has surpassed all major support levels where supply was seen more than demand and for now lingering resistance at around $1,071.20 levels, if it does not mange to break above these levels, then 1060 areas cannot be disregarded.

The recent upbeat economic data in US coupled with increased gambles on Dec Fed rate hike pumped a double blow to the precious metal, knocking-off the bullion to the lowest levels since 2010.

Last week's breach of 1096 on a closing basis have prompted us raise cautious approach on this precious metal, since it was not managed to hold above strong supports, we still anticipate sharp dips which are certain events ahead until fed's decision, otherwise it's going to be pure gamble for expecting upswings ahead of Fed's monetary season.

RSI confirms bearish trend continuation: The pair at this psychological juncture testing supports, while RSI still evidences downward convergence with sharp declines both on weekly and daily charts (Currently, trending around 49.1758 while articulating), so this indicator justifies current prices dips.

Stochastic supports bearish momentum:  To substantiate these price slumps, slow stochastic curves view on weekly charts signifies to remain in sync with the standpoint offered by RSI. %D line crossover is maintaining even below 20 levels which is oversold zone bolsters more selling pressures, (Currently, %D line is at 6.7009 and %K at 5.1144 while articulating).

10DMA: As we all know moving average is a lagging indicator, the 10DMA was also suggesting the prevailing price declines to prevail for some more time.

Hence, contemplating all above technical reasoning, it is advisable to short rallies of this commodity for targets of 1060.85 levels with strict stop loss of 1074.50 levels.