Gold retreat continues in drop below $2,600

The pullback in gold continues to run as price is now starting to dip to some interesting levels. The October low of $2,604 is now under scrutiny on the daily chart above with price dipping below the $2,600 mark for the first time since September. It’s a testing time for gold as the post-election period is favouring other asset classes at the moment.

I’m still an advocate for gold in the big picture of things, so I am very much welcoming the latest correction to be honest. The surge higher this year has been too one-sided, if one can really put it that way.

With the October low now in focus, a firmer break under $2,600 will spell out a test of the 100-day moving average (red line) next for gold. That is currently seen at $2,538. For some context, the last time gold traded below any of its key daily moving averages was all the way back in October last year. That shows the extent of the bullish run that we have experienced this year.

That will be the first line of defense to watch for dip buying activity but I could easily see this track further towards the 200-day moving average (blue line) near $2,400 just purely on the technicals alone. That will provide another layer in which buyers may look to make a stand and perhaps a timely one at that. From yesterday: Gold pullback might prove to be timely for dip buyers

This article was written by Justin Low at www.forexlive.com.