Fundamental Analysis
Gold is falling out of favor among its lovers as the Fed is preparing themselves to increase the borrowing cost. This could remain the major hurdle for any upside move for the precious metal and traders could be selling into these rallies, which we are experiencing today. The bounce in gold is nothing but a technical trade, as most of the major momentum indicators are showing that the recent sell off is overdone and traders are taking advantage of this short term opportunity. Nonetheless, the downside is protected by the support of 1050 and the next one is at 980. We do not see the gold price going lower than that regardless, how the Fed will react to their borrowing cost.
Gold at the current price is already highly unprofitable for gold miners and we do see the physical demand catching up very soon.
Technical Analysis
Gold is still trading below its 50 and 100 day moving average (shown in yellow and red color respectively).The support and resistance levels are shown in the chart below.
Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
by Naeem Aslam