In this week's update, we see will discuss the current movement in gold price. Following a previous weekly bullish outlook on the price of gold, prices were not so optimistic this week. Beginning this week, the price of gold fell sharply from 1266 to almost 1252. With positive US economic data and the situation in Ukraine stabilising, there was reluctance on behalf of gold buyers to enter the market. Prices entered into a state of consolidation after an initial dip with a possible retracement as prices had hit a strong support level at 1252. Prices continued in a sideways consolidation for the next few days before pushing below the 1252 support level. The next support level is around 1240 which may or may not hold in the long run. Regardless of this fact, it is commonly known that gold prices below 1200 will trigger strong buy because it is the average cost of production for an ounce of gold. A decline below 30% would be catastrophic as it would cause 30% of the mining industry to be unprofitable.
There are views that the recent decline in gold price is an impulsive move that should soon trigger a short-term corrective move to the upside. The decline in prices should also trigger purchasing interest from China and India who are watchful over the gold market.
Although the price of gold is in a downward trend, bearish pressures seems to have lost momentum and is struggling to push below the 1240 level. We will flat for now and wait for fundamental news for directional confirmation.