Gold breaks key support

The stronger dollar strikes again and it’s directly hit commodities. Not all of them of course, but most definitely some of them.

Let’s take gold as an example. Gold yesterday broke the most important support in over two years – 1685 USD/oz (yellow).

As you can see on the chart, 1685 was a bullish stronghold since the early 2020. Most recently, sellers have been biting this area more and more frequently. Bearish pressure had been rising, strengthened by a steep down trendline (red). Yesterday, the support snapped and the price dropped like a rocket, most likely fueled by stop loss orders from long positions opened above the 1685 USD/oz area.

Today we have a crucial day on our hands. Buyers are trying a small reversal but this is a pretty typical test-the-broken-support-as-a-resistance movement. Friday is also crucial because today we’re closing a weekly candle. Gold closing a week below the yellow area will give us a long-term sell signal. On the other hand, the price somehow coming back below would be a signal to buy. However, chances of that happening are now rather limited.