Gold Cannot Fight The Gravity
Admirals | Nov 21, 2013 06:14AM ET
Gold is negatively correlated with S&P 500, but yesterday, they both moved the same direction – down. Gold is in huge trouble, and bears are supported by strong technical signals. Currently, the price of this commodity (after breaking lows from October) is on the lowest levels since the beginning of the month of July. Sellers continue the movement that started after breaking the lower line of the triangle (blue). Breaking the 1,260 support (green) increased the momentum which was also supported by the hawkish comments from the FOMC. 1,260 will now be the closest resistance and price should not come back above.
Chances that Gold will fall to its recent long-term lows from June are high and this is the base scenario for this commodity. Some traders will want to use the low prices and buy, but this strategy is rather risky in the mid-term, as gravity is recently one of the biggest enemies of Gold and there are absolutely no technical signals that the shinning metal will start a significant bullish retracement anytime soon.
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