After hitting a near 3 year low yesterday, gold is attempting to form a bottom in the 1220-1225 support zone. This morning, after making a "double bottom" in the support area, gold is moving higher and is currently trading around 1236.
Gold has dropped over $300 since crashing through major support at 1525 in April, driven lower by massive ETF redemptions, rising interest rates, an expectation of withdrawal of Quantitative Easing and improving economic conditions in the US.
The physical demand that swooped in to arrest the initial decline in April has not materialised on this latest price fall in what is historically a weak period of the year for gold.
A resurgent dollar is pressuring the gold price, and whilst the likelihood of a short term recovery rally are high, in the medium term the prospects for gold look bleak. A test of 1156 looks a virtual certainty and a drop as low as 1000 must be considered likely.
However, once a bottom eventually forms, a powerful short covering rally should develop as the open short position in gold is at historically high levels.
Today's video for subscribers looks at the recent decline in more detail and our thoughts for our next trade.
Gold has dropped over $300 since crashing through major support at 1525 in April, driven lower by massive ETF redemptions, rising interest rates, an expectation of withdrawal of Quantitative Easing and improving economic conditions in the US.
The physical demand that swooped in to arrest the initial decline in April has not materialised on this latest price fall in what is historically a weak period of the year for gold.
A resurgent dollar is pressuring the gold price, and whilst the likelihood of a short term recovery rally are high, in the medium term the prospects for gold look bleak. A test of 1156 looks a virtual certainty and a drop as low as 1000 must be considered likely.
However, once a bottom eventually forms, a powerful short covering rally should develop as the open short position in gold is at historically high levels.
Today's video for subscribers looks at the recent decline in more detail and our thoughts for our next trade.