2016-10-17 15:43:23

Review and dynamics
The price of gold has been falling sharply since the beginning of this month. Positive US macro-economic data and comments of the Fed’s officials have increased possibility of the rate hike in December. According to CME Group's, last Friday, probability of the rate hike in December was estimated at 69%. The rise in the USD puts pressure on gold price, and the pair XAU/USD is below the key resistance level of 1268.00 (ЕМА200 on daily and weekly charts).

Last week the pair XAU/USD has broken down this important level and is now declining in the descending channel on the daily chart with the lower limit near the key support level of 1218.00 ( Fibonacci 23.6% to the decline since October 2012). Gold price is now at the 4-month lows.

Our opinion
On the weekly and monthly charts the indicators OsMA and Stochastic give signals to sell.

On the daily and 4-hour charts the indicators are in the neutral zone, indicating continuation of the flat.

However, judging by the fundamental data and technical pattern on the daily chart, we can assume that the pair XAU/USD and the price of gold will to continue to decline.

Important support levels of 1285.00 and 1268.00 have been broken down. Downtrend in the pair XAU/USD will continue until the pair maintains the level of 1268.00.

Breakdown of the support level of 1218.00 (Fibonacci 23.6%) may trigger further decline in the pair XAU/USD and resumption of the downtrend, which began in October 2012.

Medium-term long positions can be possible only if the price consolidates above the level of 1285.00.

After the consolidation of the price above the local resistance level of 1324.00 (Fibonacci 38.2%) further rise in the pair will be possible.

In the case of breakout above the levels of 1370.00 and 1385.00 the price of gold may increase up to $1400.00 per ounce.

Support levels: 1250.00 and 1218.00.
Resistance levels: 1268.00, 1285.00, 1324.00, 1350.00, 1370.00, 1385.00 and 1400.00.

Trading tips
Buy Stop: 1272.00. Stop-Loss: 1265.00. Targets: 1285.00, 1300.00, 1324.00, 1350.00 and 1370.00.
Sell on the market. Stop-Loss: 1265.00. Targets: 1218.00 and 1200.00.

Indicators give signals to sell
Indicators give signals to sell

In the descending channel
In the descending channel