Gold plunged sharply on Friday, during early Asian session, dragging the price of yellow metal to less than $1210 and threatening the crucial trendline support. The technical bias has turned bearish in the long run because of a Lower Low in the ongoing downside wave on daily chart.
As of this writing, the yellow metal is being traded near $1208 an ounce. A support may be noted $1200, the confluence of psychological number and huge horizontal support area. A break and daily closing below the $1200 support zone shall incite renewed selling interest, validating a move towards the $1160 and $1050 support zones.
On the upside, the precious metal is expected to face a hurdle near $1241, the short term resistance area ahead of $1297-$1300, the confluence of psychological number as well as a major horizontal resistance and then $1337, the high of the giant bearish candle which was emerged after the US elections. The technical bias shall remain bearish as long as the $1241 resistance area is intact.
Federal Reserve Chair Janet Yellen signaled the U.S. central bank is close to lifting interest rates as the economy continues to create jobs at a healthy clip and inflation inches higher. A rate hike “could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the committee’s objectives,” Yellen said in the text of testimony she is scheduled to deliver Thursday in Washington before Congress’s Joint Economic Committee.
Considering the overall technical and fundamental outlook, selling the yellow metal on a breakout through the $1200 support zone appears to be a good strategy in short to medium term.