Gold Falls 300 Pips in a Quick Reversal

Gold has turned bearish suddenly, losing more than 300 pips

Skerdian Meta•Wednesday, January 6, 2021•1 min read

Safe havens were bearish for about two years, as a result of the trade war between the US and China, which kept the sentiment in check in financial markets and the demand high for safe havens, such as gold and SILVER. Gold surged above $ 2,000 in the first week of August 2020, but reversed down in the second week of August, as the economic data was coming in quite strong after the lockdown period.

After that, safe havens remained bearish for several months, until the end of November. In December they turned bullish again and have been increasing for more than a month now. The descending trend line and the 100 SMA on the daily chart were both broken on Monday morning, after GOLD opened with a bullish gap higher after the New Year’s break.

The bullish momentum continued this week, pushing the price quite close to $ 1,960. But, a strong reversal came along a few hours ago, which saw gold crashing more than 300 pips lower, to $ 1,927. The EMA recommended the Moderna coronavirus vaccine for authorisation in the EU earlier today, so that was probably the reason for the bearish decline, because I can’t see what else could have done it.

However, this was very much expected, given the developments earlier in the week, and considereing that they convened for the meeting earlier. Either way, that is added good news (or it at least reaffirms the optimism) on the vaccine front, to kick-start the year. Besides that, the US ADP employment showed a 123K decline in jobs last month. Gold bounced around 150 pips higher a while ago, but has returned back down now, and is likely to fall further, judging by the price action.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.