The price of gold surged on Friday due to anticipated geopolitical risks in Israel, reaching a high of $1932.88 and surpassing both the 100 and 200-day moving averages in the process (blue and green lines on the chart above). However, in today’s trading, the price hit a high of $1932.63 but failed to extend further, allowing sellers to push it lower. The current price stands at $1919.42, down -$13 or -0.67%, and is now below the 100-day moving average at $1922.69.
Looking ahead, if the price continues to decline, traders should monitor the broken 38.2% retracement level at $1903.46, a level that previously provided support on August 25 and September 14 before breaking lower on September 26. If the price falls below this level, the next potential support is at $1886.87, which represents the lows from mid-August and near the high from October 12.
A move back above the 100-day moving average and the 200-day moving average would open the door for further upside momentum.
Fundamentally, the 1st barrage at the key daily moving averages did a fairly good job of stalling the rise. However, geopolitical risks from increased tensions in Israel remain and could spike gold through those technical levels. If done I would not fade the move as there could be increased momentum from the technical break in addition to the fundamental story.
This article was written by Greg Michalowski at www.forexlive.com. Source