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Gold: Losing conviction above the 61.8% Fibo on continued failures below last swing high, 1,298

  • Gold has been drifting to the downside with a rise in the greenback as the Fed trade wears thin and the market breathes. 
  • Currently, gold is trading at a spot rate of $1,288, down from $1,297 Asia's high.

Gold prices have benefitted from a drop in the greenback which reached as low as 95 yesterday, down from 96.95 highs from the start of this year. The market's a starting to reposition for inflation considering the sentiment surrounding the Fed's cautionary approach to raising rates. 

"A weaker USD, stronger Chinese yuan and the FOMC minutes showing concerned members as early as December, all helped to support precious metals,"

analysts at TD Securities explained.

Looking ahead

Looking ahead, the price of gold will take its cues from not only the political environment, namely the Sino/US trade dispute, but also headlines pointing to US economic weakness which will weigh on the greenback, prompting the Fed to be less committed to bringing rates into the restrictive territory. Also, higher volatility in equities could also be a catalyst for a speedy movement away from US money markets and into safer havens such as gold and silver. 

Gold levels

Gold is at risk of failing to proceed with its northerly trajectory above the 61.8% Fibo retracement of the 2018 decline to date. Continued failures expose this level and will open up the case for 1280 if broken with daily closes. A break there opens a runway down to the 2018 50% Fibo area at 1262. RSI and MACD remain neutral. However, on a break of 1300, eyes turn to 1350.

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