Technically, gold futures prices have been damaged and will likely have a difficult time gaining significant traction. Any investor who initiated a gold position after it broke out to new highs in March of 2011 is now underwater. Any bounce up to the 1425 level in gold prices is likely to be sold as investors who are now out of the money will be looking to exit the gold market. Former support on weekly gold futures prices was the Bollinger band low (2-standard deviations below the 20-week moving average) which will be target resistance at 1468 if gold prices close above the 1425 level.
On a weekly basis gold prices are oversold as reflected by the relative strength index (RSI). The RSI is printing near 22, which is well below the oversold trigger level of 30, and shows that gold is poised to rebound.
The daily chart of gold futures prices (provided by Bancde Binary ) shows the damaged that has been inflicted on the yellow metal. The Bollinger band low near 1345 is now initial support, where the 5-day moving average near 1470 is seen as daily resistance. This price coincides with the weekly Bollinger band low.
Daily momentum on gold futures prices is negative with the MACD printing in negative territory. Negative momentum began in mid-April and continues to create headwinds for gold prices. During the past week during the height of the gold liquidation the MACD was printing at its lowest levels seen in more than 18 months.
