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When will gold prices stop breaking support levels?

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Gold prices break down key support

April futures for gold prices broke key trend line support on March 6, 2015, breaking levels of $1,192 and $1,180 per ounce. The collateral damage of gold was led by strong US labor market data and, in turn, a strong dollar.

Gold prices hit a three-month low on March 6 and settled just above the important support level.

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Key support for gold

The current momentum could push gold prices lower. The key support for gold is seen at $1,160 per ounce. The last time prices hit this mark was in November 2014. Bearish sentiments are overshadowing the bullion market. There is a glimpse of hope only if a piece of positive news drives gold higher. The nearest resistance is at $1,180 per ounce.

The above gold chart analysis suggests that gold prices could move downward. A strong dollar will also generally drive dollar-denominated gold lower. According to the downward trending channel, gold could trade between $1,160 and $1,200 per ounce levels.

Huge investor fund outflows

The RSI (relative strength index) is in oversold territory, and prices could rise at these RSI levels. On the other side, MACD (moving average convergence divergence) is trending lower, which means prices could fall further. Traders should be cautious because gold funds are seeing huge investor fund outflows.

Some of the key gold ETFs are the VanEck Vectors Gold Miners ETF (GDX) and the iShares Gold Trust (IAU). The decline in gold prices also impacts stocks such as Goldcorp (GG), Barrick Gold (ABX), and Newmont Mining (NEM). These stocks account for 10.19%, 8.64%, and 7.48% of GDX, respectively.

For the latest updates on gold, visit Market Realist’s Gold ETFs page.

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