Technical Bias: Bearish
The price of Gold plunged broadly this week after skyrocketing to over $1300 an ounce amid safe-haven buying due to the Eurozone crisis. The long term technical bias remains bearish due to a Lower Low on the weekly chart.
As of this writing, the precious metal is being traded near $1260 an ounce. A support can be seen around the current level which is the long term 61.8% fib level as demonstrated in the following weekly chart. A weekly closing below the $1263 support area could open doors for a further correction towards the $1200 milestone, the psychological number.
On the upside, the yellow metal is expected to face a hurdle near $1344, the swing high of the last major upside rally ahead of $1388, the high of 2014. The technical bias will remain bearish as long as the $1344 resistance area is intact.
The US Bureau of Economic Analysis is going to release the Gross Domestic Product (GDP) report today in New York session. According to the average forecast of different economists, the GDP remained 3.59% in the fourth quarter as compared to 5.0% in the quarter before. Generally speaking, higher GDP reading is considered positive for the economy thus a worse than expected actual outcome will be seen as bullish for Gold and vice versa.
Considering the overall technical and fundamental outlook, buying the yellow metal around the current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing below the $1250 support area.