Gold prices continue to trade is a narrow range with resistance for the precious metal on the upside near the $1207 with support on the downside near the $1186 levels. The precious metal in the session on Friday was unable to sustain at higher levels which is a cause for concern for traders and investors. In the early Asian session, gold trades flat, indicative of low buying interest present at current levels.
The dollar index has broken above the 90 level which would have a negative impact on the prices of gold in the near term, as the greenback shares an inverse relationship with the precious metal. Traders and investors believe that the hawkish statements from the Federal Reserve as per the FOMC minutes has been seen as a huge negative and kept the gains of the precious metal capped on the upside.
Traders and investors would shift focus to the release of the US GDP numbers on Tuesday which would provide an insight into the strength of economic growth of the US economy. Traders believe a strong US GDP number would be a negative for the precious metal in the near term.
When looking at the daily charts for gold, the precious metal continues to show signs of the fact that bears are using every rally as a selling opportunity which is a huge negative going forward. Gold continues to trade below all important daily moving averages. The momentum indicators for gold are showing first signs of a bearish reversal which is indicative of the shift of momentum towards the sell side. The relative strength index continues to trade flat and exhibits no inherent strength which is a huge negative for the near term.
Short Gold at current levels for an intermediate target at $1170 with a strict stop loss above $1207.
With over 20 years’ experience in the heart of the investment industry, Ben Myers has become one of the most respected commentators in the financial world. Having worked for global institutions such as HSBC and Bank of Ireland, Ben ran his own successful investment company in the UK before becoming chief analyst at ECMarkets and now YesOption. Ben remains a keen forex and binary options trader and is a regular featured analyst for a number of online news portals including bbc.com, investing.com, and was responsible for YesOption winning the Best Technical Analysis Award 2014 from DailyForex.com.