Gold price actions showing signs of indecision in market

THE recent strength in the US dollar index has resulted in gold breaking below the key support level at US$1,300.

The psychological round number area was particularly important because it was the pivot point that kept the bulls intact since January 2018. For the past five months, there were five separate occasions where the number halted the sell-off (shown by yellow highlighted boxes in the chart).

It was only on May 15 that the bears finally broke below it. Once gold broke below the US$1,300 zone, the sell-off exacerbated as the long speculators were forced to cover their positions with their sell stops being triggered. On the day of the bearish breakout, gold fell to a low of US$1,289.