According to the Times of India via
an article from Reuters in Singapore, gold is suffering from a lack of buying
interest from Asia, where the physical precious metal has traditionally been in
demand for both jewellery and as an investment.
Also, the relatively strong US
dollar, in which gold and gold futures are priced and which would therefore
tend to increase their cost in other currencies, and a requirement for funds to
purchase European equities which are expected to rise on the back of a weakening
Euro, are placing pressure on the price.
Now we have news of what sounds like
a breakthrough treaty on the Gaza Strip and a meeting arranged between Vlad
Putin and the Ukrainian president, Mr. Poroshenko, which might lead to
something positive. This means that, with the exception of the situation in
Iraq and Syria, geopolitical tensions seem to be easing. All these things are
bad for the price of gold.
On the Technical Analysis front, the
gold spot contract, XAUUSD, has formed a descending triangle which can be best
seen on the weekly chart. Here it can also be observed that price has respected
the 200 period EMA (blue line), as resistance, and two support levels, at 1275
and 1180 respectively. The lower one has been particularly strong. A descending
triangle of this sort is a bearish signal.
…and
traders could enhance that tendency
The data on the commitment of traders
from Forex brokers, notably Oanda, points to a relatively large number of market
participants that are long gold and are now in the money (they have an
unrealised profit). These positions are matched with a preponderance of sell
orders, which are comprised of those who believe gold is going lower, as well
as covering Stop Loss sell orders for those traders who are long and will
either wish to lock in profit or limit losses.
If this situation is matched in
the market in general, it indicates that further selling pressure in the yellow
metal could be in the offing.
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