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Gold has been under pressure over recent months, with the resurgence in the US dollar and a bullish economic environment helping dispel any fears over a breakdown of global trade, thanks to US-led trade talks.
The price of gold has finally broken below the critical $1236 support level this week, with significant bearish consequences to that breakdown. The weekly timeframe highlights the continued creation of higher lows since the market bottomed out in the fourth quarter (Q4) of 2015. That move seems to set us up for a protracted period of downside for gold, with the weakness seen throughout the past three months unlikely to be the end of the selling. With the price trading within an ascending triangle formation over the past two years, this eventual bearish breakdown signifies that we could move into a more trending market environment. That break of the $1236 level not only negates the creation of higher lows since 2015, also completing a double top formation and breaking the 200-week simple moving average (SMA) in the process.