Gold price decline accelerates but may be oversold

The price of gold has accelerated its downward spiral since June 20 and on June 26 marked its lowest level since August 2010. Investors who had purchased the yellow metal as a hedge against higher inflation have been squeezed out aggressively this year. But there are indications gold is oversold.

On a long-term basis, gold has broken below $1,281/ounce, from the 38.2% Fibonacci of the uptrend between March 2001 and September 2011.

In the short-term, gold faces a downside target of $1,180/ounce from the 1.236% Fibonacci projection of the downtrend between September 2012 and April 2013, and then at $1,093/ounce (1.382%).

Only a close above $1,281/ounce would signal that gold has formed at least a short-term bottom.

Source: Thomson Reuters Eikon

 
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