After an impressive rally from early July through early September gold has spent the last month in a downtrend. After this morning's U.S. September non-farm payrolls report gold is tantalizingly close to a crucial area of support:
Gold (Daily - 1 Year)
The US$1260 level has been a critical support/resistance level for the last several years (just look at how many times this level served as support or resistance in just the last year). If the breakout that we had on the monthly time frame at the end of August is for real then it's unlikely that gold will fall much below $1260, and certainly not below the rising 200-day moving average (red line currently at $1250).
I believe gold is fast approaching a critical moment that will result in either a tremendous buying opportunity OR a breach of support that will make the late-August/early September surge look like a failed breakout on weekly and monthly charts.
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