SMM: after Monday's plunge, gold prices have fallen by more than $200 from their August peak, and the decline in risk aversion has put a lot of pressure on the gold market.
Chris Vermeulen, chief market strategist at Technical Traders, said the short-term gold market momentum is on the downside and gold prices will test the support level of $1810 an ounce before turning higher again.
However, Vermeulen said that if the gold price falls below the support of 1810, it could fall further, all the way to $1600 an ounce.
"if the gold price maintains 1810 support, then this will be a very important turning point."
Vermeulen pointed out that generally speaking, after a key level is maintained, the market tends to have a sharp reversal, and the trend in the future will be very volatile.
The recent news of the vaccine has made market sentiment positive and risk aversion lower, depressing the price of gold.
"many investors will feel they need to sell when they see the gold price moving in this way, so the gold price is likely to fall further, and the sell-off is likely to eat for at least another day. Ideally, gold can maintain the $1810 / oz mark. "
In the long run, however, Vermeulen expects gold to rise again, looking at $2400 an ounce.
"there is a lot of upside in the gold market, but to reverse the current downtrend, support of $1800 to $1810 an ounce will be critical. If the area is broken and the weekly close is below that level, it indicates that the gold market may have really peaked and the downside may even fall back to $1500 or $1600 an ounce. "
