Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

A major bearish breakout in gold


The commodity markets were badly sold off this week as the US dollar soared resulting from a plunge in the Eurodollar. While the commodities are pricing in a recession, growing bets of less aggressive Fed rate hikes boosted a speculative rally in the stock markets. The impulsive risk-on sentiment has sent the safe-haven asset, gold lower, down for the second straight trading day. Now that gold had a major downside breakout on the pivotal support of 1,785, a further selloff is expected in the near term.

Gold - cash, daily NG (Valid for 1-2 weeks)

(Click to see the enlarged chart)

Gold - cash, weekly NG

(Click to see the enlarged chart)

In the daily chart, the base metal now is falling into a descending channel, with the pivotal resistance at 1,785, the day-low seen on 1 July. The open price on the same day can also be seen as a resistance level as gold usually swings widely, which confluences with the Fib. Extension 100.00%, pricing at near 1,808. If the downtrend persists, further support can be predicted by the Fib. Ext. 161.80%, at 1,700. In addition, the pivotal support of 1,657 remain at day lows on 9 March 2021,  30 March 2021, and 9 August 2021, which is the potential neckline support in a weekly double-top configuration scenario.

Fibonacci extension in the daily chart – connects the high on 8 March (A), the first low on 16 May (B), and the lower high on 10 June (C). 

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.