Gold Price Outlook – Gold Slips on Friday

Gold Technical Analysis

The gold market initially did gap lower to kick off the Friday session, only to turn around and test the $4,200 level. The $4,200 level is a large, round, psychologically significant figure that a lot of people had watched closely on the way up. This area rejecting price is interesting because gold had much more volume the first time we blew through it, and this time the volume is quite a bit lighter. At this juncture, I suspect that gold could drop to the $4,000 level, a large, round, psychologically significant figure that has a cluster at it.

We had formed a base recently, with the 50-day EMA racing toward it. With this being the case, I think you have a situation where we will be watching the $4,000 level rather quickly because if that gets broken to the downside, it is likely that we have just seen the top. Ultimately, that could open up a massive drop, maybe down to $3,500. This is a bit of a classic topping pattern. We shoot straight up in the air with lots of volume and then pull back violently. We bounce again, but the volume is less. If we roll over here, this is classic.

We will just wait and see how this plays out, but suddenly, gold does not look like it is going to be as strong. On the other hand, if we break above the top of the candlestick from the Thursday session, then it could possibly open up the idea of going to look toward the $4,400 level. All of that being said, it certainly looks like we are in the process of potentially rolling over.

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