On Monday, found a sharp sell-off as US President Donald Trump said he would not impose tariffs on gold. At the same time, on Friday, the U.S. Customs and Border Protection had posted a ruling on its website saying that Washington might place the most widely traded gold bullion bars in the United States under country-specific import tariffs, by imposing a 50% extra tariff, and this resulted in a jolt for the gold markets on Friday.
Undoubtedly, Trump’s step back to keep the gold bars out of the tariff seems to be a solid attempt to end the days of speculation that the yellow metal could be caught up in the ongoing global trade spat, which will come as an enormous relief to the bullion markets, as the potential for disruption was incalculable.
I find that the gold bulls were swinging on Friday amid hopes for surging concerns, which could have escalated the gold futures to test new highs, but Monday’s move delighted the gold bears to remain in command and look ready to push the gold futures further downward.
Technical Levels to Watch
In a 1-Hr. Chart, gold futures are trading below the 20 DMA, which has already formed a bearish crossover by piercing the major support at the 200 DMA at $3418, forming a bearish crossover, and another bearish formation with the piercing of the 100 DMA at $3442 by the 50 DMA at $3435.
I anticipated that the gold futures look ready to see a steep slide from the current levels to test the immediate support at $3374, and breakdown below this could continue this selling spree to hit the next support at $3334 while any upward move will face stiff resistance at the significant resistance at the 200 DMA.
In a daily chart, gold futures are teetering in a narrow range in follow-up of Monday’s steep slide, facing significant bearish pressure below the immediate resistance at the 20 DMA at $3408, while the next resistance is at the 9 DMA at $3421.
I anticipate that if the gold futures find a breakdown below the immediate support at the 50 DMA at $3378, the next support for the gold futures will be at the 100 DMA at $3315.
Undoubtedly, some bounce back could be seen if the gold futures test this second support at the 100 DMA before this weekly closing but the overall trend will remain bearish as the bear are in command after the Trump’s announcement to keep the yellow metal out of tariff-ring and they could push the futures to test the significant support at 100 DMA, once the gold futures find a breakdown below the immediate support at the 50 DMA at $3378.
Inversely, any upward move above the immediate resistance at the 9 DMA will attract big bears to load fresh shorts in case of an upward move to test the next resistance at $3448 with a stop loss at $3479.
Disclaimer: Readers are requested to take any position in gold at their own risk, as this analysis is only based on observations.