Market Minute: Gold Bugs Squashed as Red Premarket Continues -8% Rout from Highs

Gold futures (/GC) have plunged -8% from their all-time highs near 2,801 in only 11 trading days as of yesterday’s close, and the pain could continue today as early trading already showed the yellow metal down -1% on the day. The downward move has been swift and seemed largely catalyzed by the results of the U.S. presidential election on Nov. 6 when price took a -3.1% dive on a volume spike almost twice as large as its 50-day Simple Moving Average. 

For bulls looking to the technicals for hope, things have only worsened from there. The /GC contract broke through a long-term upward trendline that began in mid-February on Monday and has breached the 21-day and 63-day Exponential Moving Averages, along with two important sets of horizontal support marking previous highs/lows near 2,615 and 2,570. 

Momentum also seems to be accelerating to the downside. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) both show bearish crossovers and steepening trends. The RSI is now quite close to the oversold threshold of 30, which would typically be regarded as a further bearish sign during a downtrend. 

If price continues to move lower, look to a volume node that formed around an old range 2,540 during mid-August, while the lows from that same range are near 2,505. Beyond that, there’s the 252-day EMA near 2,382 and a large volume node around 2,350. To the upside, look for potential resistance near the old low around 2,615 and then at the confluence of the old longer-term trendline and the 63-EMA near about 2,635.