Why is gold not rallying whilst the dollar is selling off? [Video]
|Gold
There are a few quandaries facing gold right now. Why is gold not rallying during this massive risk sell-off? Why is gold not rallying whilst the dollar is selling off? The momentum of the gold bull run played out last week, moving well into overbought territory on RSI. Since then the market has been unwinding. The reaction during yesterday’s session, where gold turned back from $1660, just shows that the bulls have run out of steam and profit-taking has hit again. The consolidation we talked about yesterday is beginning to break support as yesterday’s low at $1625 is being tested. Given the lack of bull reaction yesterday, the potential that there could be further unwind on gold is growing. The market is again testing below the 23.6% Fibonacci retracement (of the $1445/$1688 bull run) at $1632 as a basis of support. However, a close below $1625 would open a retreat to the last key breakout at $1611 and potentially the 38.2% Fib at $1595. Our expectation is that weakness on gold will build support in the coming sessions, allowing the upside potential to renew on gold. However, we also see that these are very volatility market conditions right now, but weakness as a chance to buy. The 11 week uptrend support is at $1587 today. Initial resistance at $1649 this morning.
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