Gold breaks trend amid rising bond yields
Gold has finally buckled under pressure from rising yields and US dollar, with stocks also hit hard. Rising yields increase the opportunity cost of holding non-interest-bearing assets.
The precious metal has just broken its bullish trend line after failing to hold above key support at $2770.
It has subsequently broken the next support seen between $2753 to $2758, an area which could now turn into resistance upon a potential re-test from below.
While the long-term trend is clearly bullish, today's breakdown serves as a reminder that market can go up as well as down and that risk management should always be your number one priority in trading.
In light of the breakdown and given how overbought gold is on the long term charts like the weekly and monthly, I would be more inclined now to look for bearish setups near resistance, than bullish setups near support...until such a time that those RSI overbought conditions are worked off (either thru time or price.)
By Fawad Razaqzada, market analyst with FOREX.com
The precious metal has just broken its bullish trend line after failing to hold above key support at $2770.
It has subsequently broken the next support seen between $2753 to $2758, an area which could now turn into resistance upon a potential re-test from below.
While the long-term trend is clearly bullish, today's breakdown serves as a reminder that market can go up as well as down and that risk management should always be your number one priority in trading.
In light of the breakdown and given how overbought gold is on the long term charts like the weekly and monthly, I would be more inclined now to look for bearish setups near resistance, than bullish setups near support...until such a time that those RSI overbought conditions are worked off (either thru time or price.)
By Fawad Razaqzada, market analyst with FOREX.com
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