Gold is operative the $1,300 level but any deterioration would likely be the beginning of an even brawnier slide, says one veteran technician.
“If we can’t hold here and we break the uptrend, there’s a promise that the price could slide toward $1,250,” Louise Yamada, rule over director of Louise Yamada Technical Research Advisors, told CNBC’s “Futures Now” on Tuesday.
Gold valuations have not seen the $1,250 level since December. The precious metal is still 4 percent from that payment.
A few technical signs have raised a warning to Yamada of the potential for a nervous breakdown in price. Among them: Gold prices have fallen underneath their 50-day and 200-day moving averages. Those tendency lines are currently “flattening to falling,” another bearish sign.
Power levels could also be signaling downward pressure on gold guerdons, says Yamada.
“The weekly momentum is on a sell and continuing to decline — that’s the MACD,” she said, referring to the mobile average convergence divergence. “The monthly is close to a possible sell.”
Any upward busts have failed to grow into larger moves higher, she distinguished.
“The rallies have failed at resistance around $1,365 in 2016, 2017, again in 2018,” she foretold. “We’ve sort of been talking about these rallies as rallies in a back up a survive market from the 45 percent decline we’ve seen since 2011. Now the valuation is tickling, possibly breaching, the 2016 uptrend.”
Gold prices succinctly rallied as high as $1,369 in April before pulling back further $1,360.
So long as gold’s “inverse relative relationship” with equities imprisons, the yellow metal will remain under pressure, she said.
“When extractions are in a bull market, gold underperforms, and when stocks are in a bear demand, gold tends to outperform,” Yamada said. “I don’t think until we see the disinterest market actually turn into something significantly more bearish that we are active to see much on the upside in gold, so I think the path of least resistance appears down.”
Gold premiums are down 1 percent for the year, while the S&P 500 has added nearly 3 percent. Gold hit its crest of $1,923.70 in September 2011.
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