Gold moves to correct after plunging to major support

Gold (daily chart April 18, 2013) has stabilised above major support around the 1315 price region after having plummeted early in the week to hit a low around 1321, establishing more than a two-year low for the precious metal. This dramatic decline continues the general bearish bias that has been in place since the price turned down after hitting a high near 1800 resistance in October 2012. The most recent major bearish event occurred late last week when the price broke down swiftly below key prior support around the 1530 area, following through early this week to hit Tuesday’s long-term low.

After establishing that low, the price has rebounded and stabilised, with further room for potential upside correction after the plunge. Though the overall directional bias remains to the downside, key upside levels in the event of further correction reside around 1425 (also the 38.2% Fibonacci retracement of the swift decline) and 1475, with major resistance residing around the noted 1530 prior support. A continuation of the bearish trend would be indicated on a breakdown below 1315 support, which would potentially seek a further downside objective around the 1260 support level.

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