Gold slides further, drops back below $128

May 9, 2016

GoldВ weakened on Monday and extended its weakness during European session and dipped back below $1280 to currently trade near session low of $1279.

On Friday, gold spike to $1295 on the back of what seemed to be poor US jobs report. However, the precious metal failed to build onto its gains on broad US Dollar recovery on Friday. The spillover USD strength on Monday continued to drag the metal lower, bringing it back to an important pivot point near $1280 level.

Last week gold prices failed to sustain above $1300 mark and Monday's fall seems to confirm that the profit taking move from $1300 prevails, suggesting resumption of the metal's near-term corrective move.

Technical levels to watch

The pair is sustaining its weakness below $1280 support marking 23.6% Fibonacci retracement level of $1207-$1303 up-move and a persistent selling pressure below last week's daily closing lows support near $1277 should continue exerting pressure on the precious metal. Below $1277 support, gold seems to extend its weakness back towards $1268-66 support area, nearing 38.2% Fibonacci retracement level.

Meanwhile on the upside, $1284-85 now seems to provide some immediate resistance, which if cleared seems to assist the pair back to its multi-month daily closing high level resistance near $1292-93 zone. On a convincing strength above $1292-93 resistance, the metal could make a fresh attempt to aim back towards $1300 mark.

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