9 Dec 2013
Gold opens the week on a flat note; 1172 technical target looms
FXstreet.com (Barcelona) - Gold has been a major source of frustration for its loyal bullish cabal. Even as the US Dollar has been on the decline – despite higher US rates – gold and silver have just refused to show any bullish tendencies.
Gold showing little more than “corrective” action on up days
Gold bulls may have the benefit of a lower DXY, but whatever tailwind that is providing may be getting an equal catalyst on the bearish side from US interest rates which have been persistently on the rise recently. The reason for the divergence? The US Dollar Index is a measure of relative strength in the greenback versus other major currencies – with the euro and the Yen being the top two influences. So, even though US rates are on the rise, the obvious strength in the euro and other majors like the British Pound have kept a lid on the greenback’s index. Gold traders are obviously paying more attention to the rising rates than they are the declining Dollar with the idea being that there is improvement going on globally and that the safe harbor demand for gold is now - and will likely be for a while – in decline.
Technical outlook for gold
Technicians say that if the bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold would likely see some buying interest at the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at last Wednesday’s high of 1251.50 and is followed up by the 11/12 low of 1260.50.
Gold showing little more than “corrective” action on up days
Gold bulls may have the benefit of a lower DXY, but whatever tailwind that is providing may be getting an equal catalyst on the bearish side from US interest rates which have been persistently on the rise recently. The reason for the divergence? The US Dollar Index is a measure of relative strength in the greenback versus other major currencies – with the euro and the Yen being the top two influences. So, even though US rates are on the rise, the obvious strength in the euro and other majors like the British Pound have kept a lid on the greenback’s index. Gold traders are obviously paying more attention to the rising rates than they are the declining Dollar with the idea being that there is improvement going on globally and that the safe harbor demand for gold is now - and will likely be for a while – in decline.
Technical outlook for gold
Technicians say that if the bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold would likely see some buying interest at the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at last Wednesday’s high of 1251.50 and is followed up by the 11/12 low of 1260.50.