Gold fall looks to gather pace.. what levels to watch next for the precious metal?

The signs were there already earlier in the week: The technical lines in the sand have shifted in gold

And with the latest leg higher in the dollar, that is cementing the drop in gold this week. That despite it coming from Trump’s tariffs threat. As things stand, the technicals are dictating that gold is looking poised for a deeper pullback. So, what levels should we be watching next?

The daily chart suggests that there is scope for the retracement to run much deeper, potentially targeting the 100-day moving average. But that is only seen at $2,720 currently. I wouldn’t rule out gold having such a sharp correction, especially since we’re definitely overdue for one for about a year or so.

However, there are still some layers to peel through before getting to that big technical level.

As seen above, we can look to the Fib retracement levels of the run higher since the start of the year for some technical guidance.

Much like the hourly chart, there is also a shift in the momentum here on the break of the 100-bar moving average (red line) in the 4-hour chart. The 23.6 Fib retracement level at $2,868 is also under threat now and that opens up further downside momentum to the next key region to watch out.

And that will be the 200-bar moving average (blue line), now seen at $2,830, as well as the 38.2 Fib retracement level at $2,814.

Beyond that, there will be more Fib retracement layers to chew through before getting to the 100-day moving average of $2,720. So, those will also be standout points in which dip buyers could look to make a stand.

It’s now a case of the downside momentum is starting to take over in gold and we’ll have to figure when and where dip buyers can make a stand. And also identify if a change in market sentiment will help give some added help for buyers to turn the tide again.

In the bigger picture, gold remains structurally bullish with central banks still looking to cut rates and even more so as central banks globally are still buying bullion by the bulk. On the latter, China remains one of the key ones to watch and officially they have been keeping up with that.

The downside for gold now is that the seasonal tailwind from December to January (in part February) has run its course. That alongside the technical breaks argue for a retracement of sorts. But again, it’s hard not to be buying on dips here if and when the opportunity comes knocking on the door.

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