Gold lost some shine in August as prices saw a yellow correction. On August 9, gold fell 4% to just under $1,700 an ounce in a 15-minute period as Asian markets were trading saadollars. This situation was considered by some analisdollarser as a ‘sudden collapse’. The World Gold Council (WGC) explains the possible reasons for this in its latest report. Cryptocoin. com, we have prepared the details of the news and analyst Christopher Lewis’ gold technical analysis for you.

What caused the ‘sudden collapse’ of gold prices in August? WGC explains

Gold traded weakly on Aug. 6 (Friday) and fell 2.3% as strong US payroll data showed the Fed could contract sooner than expected. On the same day, the US dollar strengthened, as did bond yields, further impacting the yellow metal’s prices. On Monday, August 9 of the following week, gold sales exceeded $4 billion in Asian markets. According to the report, this happens at a time when there is generally less liquidity in global markets across all assets.

WGC also said that there are some technical components that could create this rapid sale. First, the technicians highlighted the recent “death cross”, where the 50-day harekedollary average fell below the 200-day harekedollary average, which is considered a bearish cross. It’s around the $1,700 level and this has had a snowball effect, resulting in additional sales. WGC’s most important takeaway from what happened that day was that gold finished less than 2% in the US market saadollar series.

However, despite a brief flash slide, gold closed August only slightly lower than the previous month amid stronger interest rates and marginal weakness in the Exchange Traded Fund (ETF). WGC said it saw net outflows of 22.4 tons in gold-backed ETFs in August as North American outflows outweighed inflows into European and Asian funds.

Current developments and technical analysis in gold

Gold markets initially tried to recover during Thursday’s trading session, but gave back gains as it approached the $1,800 level. The ECB meeting was also going on. That’s why central bank noise and interference can be a matter of debate. However, Market analyst Christopher Lewis thinks that the 50-day EMA and the 200-day EMA also have something to say because they are both sideways. Both of these indicators are widely followed, so many algorithmic traders may have taken an interest there. Also, when you look at the selling candle, a big red candle like this is very rarely in a vacuum. Christopher Lewis makes the following analysis for the yellow gold price:

As the $1.835 level offers such a “brick wall” when it comes to trading, we are trying to build up the necessary momentum for further breakouts at this point. Obviously, if we break out there, it would be an exceptionally bullish sign and it could bounce the market up. However, I don’t see that happening, at least it’s not easy. To make this a reality in the short term, we would need to see some kind of monumental meltdown in the US dollar. On the downside, if we break below the $1,775 level, then we could likely look at the $1,750 level and then the $1,680 level where that massive “double bottom” occurred a few weeks ago.

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Michael Lewis


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