World gold prices enter a new trading week with increased adjustment pressure. After failing to maintain the upward momentum, the precious metal retreated to the 4,300 USD/ounce zone, making technical support levels the focus of market attention.
World gold prices are entering a new trading week in a cautious state after the upward momentum weakened. According to the Weekly Markets Monitor on September 14 of the World Gold Council (WGC), the LBMA PM gold price ended last week at 4,386 USD/ounce, down 0.7%. As a result, the increase in gold since the beginning of the year has narrowed to 0.5%.
WGC said that developments in the gold market are differentiating between regions. Capital flows into global gold ETFs are slowing down, except for Europe. Meanwhile, net buying positions of money managers on COMEX decreased, while investors in China continued to increase their buying positions for gold futures contracts. In the options market, traders also narrowed their positions in an upward direction.
Notably, technical signals are showing that gold prices are approaching an important support zone. According to the WGC, the 55-day moving average is currently around 4,250 USD/ounce and is considered a noteworthy support zone for short-term price movements.
WGC believes that gold prices have extended the correction phase after breaking below the 200-day moving average, and the RSI indicator on the daily chart formed a momentum peak. However, the price is moving towards the support zone of the 55-day moving average, thereby opening up the possibility that the market will find a new balance point before determining the next trend.
The 4,231 USD/ounce mark is especially noted by the WGC. This is an important support zone, close to the 61.8% Fibonacci retreat of the increase in June and August. If gold prices maintain above this area, the WGC believes that the market still has a basis for forming a new recovery phase in the current range.
Conversely, if the price sustainably breaks through 4,231 USD/ounce, downward pressure may increase. At that time, the next support zones will be at 4,203 USD, 4,166 USD and 4,149 USD/ounce respectively.
In the opposite direction, the 4,402 USD/ounce zone is the nearest resistance. If this level is surpassed, gold prices may head towards the next resistance zones at 4,443 USD, 4,511 USD, 4,538 USD and 4,632 USD/ounce.
WGC assesses that short-term risk still leans towards the possibility that gold prices will continue to test support zones, especially when buying positions in the market are still at a significant level and investment cash flow has differentiation between regions. However, the fact that the price is approaching an important technical support zone also means that the market is facing a decisive threshold.
With the current developments, 4,250 USD/ounce is a price range that needs to be closely monitored, while 4,231 USD/ounce is a more important milestone for the next trend. The ability to maintain this support zone will determine whether gold prices can soon regain balance or have to enter a deeper correction phase.
The WGC report therefore shows that the gold market is at a rather sensitive point: buying power has not disappeared, but technical signals are testing the upward trend that had formed before.
