Gold prices have recently broken through the key support-resistance zone of $4,240–$4,280 and haven't climbed back in. This suggests a retest of the $4,240 level is on the table.
Financial institutions are universally bullish on the metal in the long run due to a soft dollar and strong central bank buying. Still, many analysts warn that the aforementioned sell-off could spark a period of choppy, volatile trading and a further correction coming into play.
Even with this bullish consensus, the market is still pricing in a 35% chance of a more sustained bearish trend taking hold.
From here, gold could test major support levels, with a potential fall toward $4,000. If it cleanly breaks below that, it would signal a deeper correction is underway, thus opening the door for its drop to $3,900.
However, before any of that happens, the market needs to settle into a technical consolidation between $4,140 and $4,240, no matter the medium-term direction. A clear sign that this short-term range is forming would be a price bounce back up to $4,240, which could set up a potential trade entry with a target down at $4,140.
The ultimate recommendation is to sell gold from $4,240. Place Take Profit at $4,140 and Stop Loss at $4,300.
Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
