Gold Continues To Slide In Face Of Surging USD

LONG TERM TREND: BEARISH
INTERMEDIATE TERM TREND: NEUTRAL/BEARISH
SHORT TERM TREND: BEARISH
VERY SHORT TERM TREND: NEUTRAL/BEARISH

Whilst gold has continued to slide in the face of a surging dollar and a lack of investment interest, the price has been consolidating for the past few days above lows at 1205. It is likely that once this consolidation has run its course the price will resume it's sharp decline in a "bear flag" type chart pattern, however there is a chance that the consolidation will mark a reversal and the price will rebound.

The longer term picture for gold is bleak, with the market looking highly likely to retest 1180, a test that we expect to fail, resulting in a sharp fall towards 1000. ETF holdings are at a 6 year low, the dollar is at multi year highs and equities continue to attract huge investment despite the looming threat of interest rate rises.

The fact that inflation remains subdued means real interest rates are higher - this trend appears to be set to continue, which is extremely bearish for gold. Even geopolitical uncertainty is not helping gold at this time, with any rallies being seen as opportunities to offload longs or open new short positions.

Support can be found at 1204-1205, 1200 and 1180. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term - the failure to break the 65 week MA and the break down of the triangle pattern on the daily chart makes this scenario much more likely.

Resistance can be found at 1223, 1231, 1235, 1242, 1257-1258, 1263, 1271-1273, 1277, 1290-1292, 1300-1302, 1310-1312, 1322-1325, 1333-1335, 1340-1342, 1352-1354 and 1392-1395. A second failure to break through the key 65 week MA suggests that the intermediate down trend is intact and a retest of 1180 is now likely.