Gold On The Brink
FOREX.com | May 22, 2019 18:06
Gold has traded side-ways so far this week, moving very little in either direction. But judging by last week’s price action, the metal could be on the verge of another sharp move lower, potentially as early as this evening in reaction to the FOMC minutes – should they reveal the Fed was surprisingly hawkish at its last meeting.
Gold’s failure to break higher last week despite raised geological risks concerning the US, China and Iran must be a concern for bulls. Granted, the dollar rallied, which weighed on all dollar-denominated commodities, including gold. On top of this, investors wondered whether physical demand from China and other emerging market (EM) economies would be hit because of renewed falls in EM currencies.
Still, gold ‘should’ have risen as it is meant to be the ultimate safe haven asset after all. The fact that it has failed to do so in a market environment dominated by trade war headlines is what makes us think it will drop.
If the metal does go lower, as we think it might, then the first objective would be the liquidity below this year’s earlier low at $1266. Below that we have a couple of retracement levels to watch, with the mid-point of the range from the August low coming in at $1253/4. Meanwhile short-term resistances to watch include $1282 and $1293, levels which were previously support.
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