Gold breaks below $1,950

Gold is down again this morning and trading below $1,950. This is a level which acted as support between May and June, and resistance in September and February this year. But as with breaks of all support or resistance levels, traders should be wary of acting in haste. It’s important to establish whether the break is significant or not before pulling the trigger on a trade. That means considering the area around the price level, the size of the break and its duration. So far, there hasn’t been a serious overshoot below $1,950 which would point to further weakness. Neither has there been a sharp bounce to indicate that support is holding. So patience is warranted for both bulls and bears.