Will Gold Resume Its Downtrend?
Gold has been on a major downtrend since it broke down from its support at $1,550.00. Soon after the precious metal saw its price slip to a low of around $1,200.00. Recently, though, the XAUUSD pair made a comeback as it rallied back towards $1,350.00. But given its technical set-up, its likely that gold may resume its downtrend again. As you can see from its chart, the XAU/USD pair is seeing some selling at its previous support at $1,350.00. Continued selling around this level, overbought condition as seen in its stochasatics plus a presence of a hidden bullish divergence or a negative reversal point to a probable turn to the downside soon. If gold is unable to break above the $1,350 resistance then it may fall down and revisit its low at around $1,200.00. A move, however, above $1,350.00, may send it to around $1,475.00.
By the way, a weakness in gold may translate to a strength in the USD (since the two are inversely related) against other currencies as well. Further appreciation of the US dollar may also have a negative impact on equities especially on the emerging markets.
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