Gold bounces to form triple bottom

Gold (daily chart shown below) has bounced almost precisely off major support around the 1180 level. This rebound tentatively forms a triple bottom pattern in conjunction with the two previous 1180-area lows in late June and late December of 2013.

The past two months have seen the precious metal drop sharply. Price action broke down below a large triangle pattern in early September followed by several key support levels, including the last major low around 1240 that was hit in June.

The recent declines were accelerated somewhat by the better-than-expected US non-farm-payrolls report late last week, which helped push the price of gold down to a nine-month low around 1182 before rebounding.

Lending to the bearish technical picture is the fact that the 50-day moving average crossed decisively below the 200-day moving average in September, a condition that has not occurred since early 2013.

In the event that the tentative triple bottom around the 1180 support area holds with a continued rebound off support, key upside resistance resides around the noted 1240 previous support level, followed to the upside by the 1265 level.

Any breakdown below 1180 support could prompt a further decline towards the 1100 target price level.

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