The gold price has made numerous runs for the $1,370 mark this year only to face stiff resistance with the latest pullback taking the precious metal down to $1,325 at time of writing today
It is now sitting on a critical support level which was a former resistance level around a week ago and some say gold will fall below this level and when it does it may be time to get in.
Phillip Streible, senior market analyst at RJO Futures, predicts that gold will drop to its 200-day moving average at around $1,304.60 an ounce which will be a good time to open a long position but should the price fall further investors should be prepared to exit their positions.
“I think we are going to be stuck in a long-sideways pattern and now we will test the bottom end of the range,” he said. “I would be buying gold around $1,305 and would get out of the market if prices break below $1,300.” He said.
Some analysts say that the US dollar is the key to gold’s direction going forward and traders just need to be patient as gold’s long term uptrend is still on track and the price will eventually reverse.
Gold will “eventually break through the $1,370 level of resistance” said Brien Lundin, editor of Gold Newsletter,
“Despite its recent countertrend rally, the U.S. dollar remains in bear mode, and hasn’t been able break its longer-term downtrend.” he added.
Mr Lundin also noted that some investors are already pulling the pin on the US dollar which hasn’t been reflected into the gold price as yet.
With the smart money realizing that the Federal Reserve is in the latter stages of its rate-hike cycle, while other central banks have yet to begin theirs, the shift out of the dollar is already under way,” he said.
“A weaker dollar is also in the interests of the Trump administration, and all this bodes well for gold going forward.” He added.
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