- Gold prices keep bleeding and eyes are on $1,275/oz 38.2% Fibo.
- Gold is currently trading at 1284 within the day’s range of between $1,281.01/oz and $1,289.01/oz.
Gold prices have been under pressure with speculators bailing on signs that a trade truce deal was imminent. The price of gold started to decline from highs in the 1340s and continued to drop in a recovery in the greenback.
The DXY of late has recovered from the bottom of the 95 handle in late Jan until forming a H&S pattern in mid-Feb with a neckline at 96.65 that was recently penetrated this month – giving way to a high of 97.50 highs today – helped along by the dovish ECB event and weakness in the euro.
“Following a bout of profit taking in precious metals, we think current prices provide an attractive opportunity to participate in what we expect will be a strong year for gold,” analysts at TD Securities argued, adding:
“Jobs numbers are next item on the docket, and we think the yellow metal could have an asymmetric reaction to the upside on any disappointment, considering that risk assets continue to signal technical exhaustion following the fierce rally off the lows formed in the Christmas carnage. We still don’t expect much CTA flow for the moment, but reiterate that the bar is relatively low for algorithmic trend followers to significantly add to their length.”
The recent bid in the U.S dollar to fresh highs of 97.50 in the DXY is squeezing bulls that started to capitulate when the DXY penetrated the 97 handle through the 23.6% Fibo of last August’s rally in gold. A period of consolidation might be expected here, although the 38.2% Fibo is a tempting target for the bears at 1275 – But, daily stochastics are well oversold.