By Barani Krishnan
biedexmarkets.com – It’s one of those headlines likely to be forgotten even before the ink it had been written with had dried: Gold finished both the day and month up 0.3%.
While the bigger story in gold was probably that of the yellow metal being back in the $1,800 territory — and likely to scale $1,900 if the dollar stayed weak — there was not much evidence that those were being celebrated either.
That’s because charts suggest that unless gold tacks on another $16 at least from its New York close on Wednesday, another price plunge probably awaits.
on New York’s Comex settled at $1,818.10 an ounce — up $5.90 from Tuesday’s close and $5.50 from its July settlement.
More critically, both futures and the spot price need to get and close above $1,834, said Sunil Kumar Dixit, technical analyst at Kolkata’s SK Dixit Charting.
“Gold has been unable to break above July’s $1,834, the level which is the yellow metal’s immediate challenge,” said Dixit in an outlook published by biedexmarkets.com on Tuesday.
He adds: “Going further, the Stochastic RSI reading of 8/13 hints at highly oversold conditions for gold. A sustained move above $1,834 can reignite an upside rally, with $1,860 and $1,920 being the next stations.
“But failure below $1,834 may initiate weakness targeting $1,800 and $1,770.”
Both Comex and , which reflects real-time trading in bullion, are down more than 4% on the year.
Since January, gold has been on a tough ride. After initially bottoming out at under $1,675 in March, gold appeared to break its dark spell with a bounce back to above $1,915 in May. From there, it saw renewed short-selling that took it back and forth between $1,700 and $1,800 for a while before another move near mid-$1,600 in August.