Since September the GOLD rates have been in the frames of a downtrend. A month later, the trend has lost its intensity and now it looks more like a flat trend. The support line since October has been completely shifted and has become horizontal, but the line of resistance is still reminiscent of a continuation of a weak downward trend.
The USD this week came under pressure due to the tax reform issues in the United States. The plan of the reform proposed by the Republicans, led by President Donald Trump, didn't meet the Senate's expectations, so they are inclined to expect another version of the tax reform. As a result, investors are afraid of a failure of the tax reform. In addition, the value of the USD was negatively influenced by the tense geopolitical situation and new exchange of threats between the US and North Korea, although the market is starting to be less vulnerable to such exchanges and react less. This situation had a positive impact on the price of Gold.
At the same time, there are factors that can negatively affect the value of the Gold in the long term. Analysts indicate that global demand for Gold is gradually decreasing. They say that this asset has lost its attractiveness for investors. According to the World Gold Council, the demand for the yellow metal fell to its lowest level in eight years. In the third quarter of 2017 demand for gold decreased by 9% compared to the same period in 2016. The reason for the falling in demand is the increasing popularity of cryptocurrencies, which are also considered by some investors as a safe, but highly profitable asset. Some Central Banks also see in the cryptocurrencies an alternative to the usual assets and currencies.
At the moment the MACD and Stochastic oscillators indicate the effectiveness of the deals to SELL, according to the current downtrend. It is expected that rates which are at the moment near the line of resistance can move down to the level of 1270 - 1275 dollars and continue decreasing in the long term, if in the future we won't have a significant worsening in the conflict between the US and North Korea, and if cryptocurrencies continue to develop.
