An intraday breach of $1276 is a massive red light warning for the bulls. A decisive closing breach would complete a big outlook changing move. Intraday rallies increasingly being sold into.
With risk appetite improving, the selling pressure on gold continues to ramp up. For months there has been a basis of support between $1276 (January low) and $1280 (March/April lows). However yesterday’s intraday breach of $1276 really increases the threat of a breakdown. The bulls clung on into the close and a closing breach of $1276 was averted, however, the threat remains. A completed key breakdown would take gold to its lowest since December and a big top pattern. Momentum indicators have been deteriorating for a while now and with the MACD and Stochastics accelerating lower into negative configuration there is further downside potential. The RSI below 40 is also leading the market lower. There is a degree of unwind this morning and it will be interesting to see how the old support at $1280 is treated. This should be a basis of overhead supply now. In fact there is a near term sell zone now $1280/$1290. Any failed rally is a chance to sell. The hourly RSI is failing consistently now between 40/50.