After temporarily breaking back up through the $1300 mark at the beginning of last week, gold has now racked up 5 straight days of losses as investors exit the precious metal as safe haven in favor of the US dollar which has been powering ahead on the back of trade tensions between the US and China as well as a continuous flow of data coming out of the US.
With no end in site for the worlds superpowers to agree to a trade deal, the greenback is likely to stoke investor interest at the expense of gold and it seems for the time being the $1300 level is going to be a tough nut to crack
“The safe-haven demand of the U.S. dollar is taking some of the gloss off gold’s safety,” said Michael McCarthy, chief market strategist, CMC Markets.
“It is a tough time all around for gold with the break below $1,290 also pressuring it. In the absence of safe-haven demand I would expect to see ongoing modest pressure on gold prices.” He added.
Gold is trading today at around $1270 an ounce and is pushing down towards a critical support level of between $126050 and $1260 an ounce and if this price fails to hold, we may be in for further losses.
“Gold inability to break above $1,300 is an indication that the market is really fragile, and I think investors should expect to see lower prices in the near-term,” said Fawad Razaqzada, technical analyst at City Index. “I think you have to continue to play gold to the downside as long as prices are unable to hold sustainable gains above $1,300. On the weekly chart I don’t see any reason to be bullish on gold anytime soon.” “If gold prices go below that target ($1,256) , then where the selloff ends is anyone’s guess,” he added..
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