The price of gold reached a new low yesterday, temporarily probing below the 61.8 per cent Fibonacci retracement level at 1690 before retracing back up. While this behaviour undoubtedly demonstrates the strength of the underlying downtrend, there are also many reasons to anticipate a reality check for the retreating commodity around the current market price.
As regards the prevailing fundamental factors, there are many developments as of late that warrant close inspection. Firstly, rising yields in the U.S. are prompting a selloff in the stock market, which is having a global spillover effect. This is generally considered to be good news for the dollar, as investors weigh in on the improving economic conditions that could force the FOMC to recalibrate their massively accommodative MP stance. The general logic dictates that a recuperating dollar is bad news for the yellow metal, as it is commonly held that the commodity has an inverse relationship with the greenback.
Indeed, gold has been retreating as of late parallel to the strengthening greenback. Nevertheless, this could change soon. Gold bulls are likely to ramp up their efforts, seeing as how the 'happy times' on the stock market are coming to an end. Their expectations for a rebound are likely to be further substantiated by the fact that gold is currently trading at a major make-it-or-break-it point, which in itself could initiate at least a temporary correction.
|Short Term||Long Term||Net % Gains|
|0||18.08 USD||0||11.80 USD||
|Net % Gains|
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