Gold Continues Downward Trend. More Declines to Follow?

Gold Continues Downward Trend. More Declines to Follow?

By: Ben Myers | YesOption | On:1-10-2014 01:47
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Daily Gold Chart

Daily chart for Gold

Gold

Gold remained broadly under pressure in the early morning session today as investors kept a close eye on the dollar, which remained flat but continued to have a bullish bias. Gold witnessed a selloff in the overnight session on the back of weak global cues and a stronger dollar. Gold had the worst quarter since 2008, which is a huge cause of concern for bulls. The price action over the quarter is indicative of the waning interest in the precious metals basket.

Traders and investors are now closely looking at the level of $1200, as many believe any break below the aforementioned level can take the precious metal lower in the near term. Gold, like all other commodities has been witnessing strong negative bias as investors look towards equities and bonds. Traders and investors would be watching out for the European Central bank meeting on Thursday and comprehend the next steps to be taken by the central bank to kick-start a stagnating economy.

Any further easing measures are seen as a short-term positive for the precious metal. The nonfarm payroll data to be released on Friday would be also looked at very carefully to understand the underlying strength in the labor market.

On the daily charts for gold, the precious metal is in a very strong downtrend and has been facing selling pressure at all higher levels. The precious metal has been forming lower tops and lower bottoms, which is a bearish indicator. The momentum indicators for gold have been in bearish territory and are showing no signs of a reversal. Similarly, the relative strength index for the precious metal continues to exhibits no signs of inherent strength, which is indicative of the fact that bears have the upper hand

Actionable Insight:

Short Gold at current levels for short-term target of $1180 with stop loss above $1232

Ben Myers

Ben Myers

Success = few pips, thousand times

Ben Myers is one of the most respected and trusted names in the financial trading industry. Following a long and successful career with HSBC, Bank of Ireland and running his own investment firm

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