The gold price dropped on Wednesday as the investors were closing trades in the run-up to today's meeting of the ECB. The prices of April's gold futures dropped by 0.5% to 1257.40 USD per ounce, while the spot price decreased below 1253.00. Today, gold is trading in a narrow range and trade volumes are at their lowest.
On the weekly chart, XAU/USD dropped below a resistance level of 1258.00 (ЕМА200 and the upper border of the descending channel), and OsMA and Stochastic start to move beyond the overbought zone.
On the daily and H4 charts, indicators reversed to short positions. A breakout of the support level at 1238.00 (ЕМА144 on the weekly chart) and 1218.00 (23.6% Fibonacci level) will move XAU/USD back inside the descending channel on the weekly chart, with the lower border at below 1030.00. In this case, the price is likely to drop to a level of 1150.00 (ЕМА200 on the daily chart and the middle of the descending channel on the weekly chart).
The opposite scenario will be linked to the price for gold continuing to rise, if the market considers the ECB's actions inadequate to supporting the EU economy's growth and the zero levels of inflation.
If so, we will see the pair growing to the levels of 1300.00 (peaks of the year 2015), 1323.00 (38.2% Fibonacci level), 1385.00 (peaks of the year 2014), 1435.00 (peaks of the year 2013) and the gold then may resume its global uptrend that prevailed in the market till mid-2010.
Support levels: 1238.00, 1218.00, 1200.0, 1150.00, 1061.00, 1048.00.
Resistance levels: 1258.00, 1300.00, 1323.00, 1385.00, 1435.00.
Targets 1238.00, 1218.00, 1200.0, 1150.00, 1061.00, 1048.00.
Buy Stop 1278.00.
Targets 1300.00, 1323.00, 1385.00, 1435.00.