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(Kitco News) – Gold had a good spike following the non-farm payroll data last Friday but the move failed to sustain its momentum. The poor result lead some analysts to suggest that maybe the accommodative policy could hang around for longer but then the cold hard reality hit and the price came crashing back down.
From a technical analysis perspective, the support and resistance levels worked perfectly (click here). The price broke out of the rage and then halted at the green resistance zone to move back into the mean value area. Now the price is around the peak of the bell curve on the volume profile area on the right-hand side of the chart.
This does not really bode well for gold in the short term as the price tried to move into the next distribution higher up but failed miserably. On the downside, the next support is at the purple area near $1745/oz and below that the consolidation low at $1720/oz. If the purple area is broken that could be bad news for the bulls. On the topside, the previous wave high seems some way away. For the bulls to have any meaningful hope in the near term, the next resistance that needs to be broken is $1782.24/oz.