Today at the center of our analytical discussion will be one of the safe-haven instruments, gold.
With the recent drop in the dollar’s value, as well as lower bond yields in the United States, the gold was able to come out of a four-month weak session and regain some of its old strength. Investors now expect that yields will stabilize and allow the price of gold to rise in the medium term.
Following the new trend among central banks around the world to favor more hawkish approaches to monetary policy, which have the potential to boost currency prices, investors have a renewed interest in precious metals such as gold, which previously gave up its popularity to the American dollar. This is also reflected by the high demand for gold imports in the US, amid a rumor that taxes will be increased soon.
Right now investors have their eyes on Federal Reserve Chief, Janet Yellen, who is set to give an important speech. If she expresses a positive prognosis for the American economy by the Federal Reserve, then we would begin to see a new strengthening of the dollar, most likely accompanied by a new interest rate increase, and this would impact negatively on the price of gold.
In a bearish scenario for the gold, if the price falls below the key support at $1208 per ounce, then we’d likely see the precious metal drop even further down to $1180 and $1160. Alternatively, if the bulls somehow manage to pull through the current bearish trend, then we can see the gold test the resistances at $1230 and $1260.
As of the moment of this article’s publication the Gold is trading at around $1218, and most indicators agree on a sell signal.
