Gold cools on profit-taking but still poised to end the week higher

The precious metal is down another 0.6% today to $3,952 after the drop in US trading yesterday. I wouldn’t tie it to other catalysts apart from profit-taking activity, one that is expected as gold hits another major milestone this week. The $4,000 mark is definitely one to steal headlines and so, one can reasonably expect price to cool a fair bit before thinking about the next leg higher.

I mean even with this “setback”, gold is still poised to end the week higher and is set to make it eight straight weeks of gains. That will mark the hottest streak for the precious metal since January to February.

As price cools off, the near-term chart is where the focus will shift towards:

As things stand, price action is now holding below its 100-hour moving average (red line) and under the $4,000 mark. However, the 200-hour moving average (blue line) is not broken just yet. As such, the near-term bias remains more neutral for now.

In other words, buyers have seen the more bullish bias extinguished but they are not out of the game just yet. The onus is on sellers to put pressure to break the 200-hour moving average, seen at $3,921 currently, to mark a more meaningful pullback in gold prices next.

Otherwise, dip buyers will still be in with a shout as the profit-taking here remains a relatively mild one for the time being.

So, break the 200-hour moving average first and then we can only start talking about a deeper pullback/correction. If not, dip buyers are still in it and will be waiting to sniff out further opportunities down the road.

This article was written by Justin Low at investinglive.com.