Gold on the brink
Fawad Razaqzada May 22, 2019 5:33 PM
Gold has traded side-ways so far this week, moving very little in either direction. But judging by last week’s price action, the metal could be on the verge of another sharp move lower, potentially as early as this evening in reaction to the FOMC minutes – should they reveal the Fed was surprisingly hawkish at its last meeting.
Gold’s failure to break higher last week despite raised geological risks concerning the US, China and Iran must be a concern for bulls. Granted, the dollar rallied, which weighed on all dollar-denominated commodities, including gold. On top of this, investors wondered whether physical demand from China and other emerging market (EM) economies would be hit because of renewed falls in EM currencies.
Still, gold ‘should’ have risen as it is meant to be the ultimate safe haven asset after all. The fact that it has failed to do so in a market environment dominated by trade war headlines is what makes us think it will drop.
If the metal does go lower, as we think it might, then the first objective would be the liquidity below this year’s earlier low at $1266. Below that we have a couple of retracement levels to watch, with the mid-point of the range from the August low coming in at $1253/4. Meanwhile short-term resistances to watch include $1282 and $1293, levels which were previously support.
Source: FOREX.com and TradingView
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.