FxWirePro: Gold likely to test support at $1200

After touching a new 2016 high in the last week, on the back of the fear that was rising from an increased likelihood of an exit of Britain from the European Union, fold faced large selloffs on the very same day.  Reaching a high of $1315/troy ounce, gold price declined on the very same day on 16th June to close at the bottom of the day around $1278/troy ounce.

Such price actions are highly bearish for the gold and more so because gold has broken below the low made on the 16th and currently trading at $1266 per troy ounce. Moreover, current higher possibility for Britain to remain inside the Union likely to be bearish for the gold.

Though we remain bullish on gold over the longer horizon, we believe there exists a strong possibility that gold will go down and test support around $1200.

Kindly note, British referendum counting and interim local announcements likely to generate ample volatility, which would be sufficient to push gold to that level, whereas it can bounce from there if Brexit does occur.