Gold rebounds to $2,340 area, stays deep in red for the week


Gold fell nearly 4% in the previous two trading days and touched its weakest level in two weeks below $2,330 on Thursday. As US Treasury bond yields stabilize on Friday, XAU/USD stages a correction toward $2,340 but remains on track to post large weekly losses.

 

Gold price (XAU/USD) has decisively broken below a major trendline for the uptrend since February, ushering in a new more bearish technical atmosphere. 

The steep decline from the all-time highs registered on Monday now suggests Gold is probably in a short-term downtrend, favoring short positions over longs.

The penetration of the major trendline signals Gold will probably now fall to a conservative target at $2,303 (Fibonacci 0.618 extrapolation of the prior down move from $2,435 to $2,355) or all the way down to $2,272 (100% of the prior down move). The latter level is also the support from the May 3 lower high. A break below the $2,325 lows would provide confirmation of more downside to these targets. 


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