Gold: the rally is over
Kira Iukhtenko, FX BAZOOKA analyst
Gold extends the downside after hitting a $1388 on March 17 (highest since September 2013). On Tuesday the yellow metal touched a 1-month low of $1307.
We see 2 fundamental reasons for gold weakness these days. Firstly, the Fed’s March decision to continue tapering and their hints on earlier-than-expected rate hikes support the overall USD demand. Secondly, the threat of Russia/Ukraine military conflict declined, reducing demand on “safe” gold.
The technical picture also doesn’t look optimistic for XAU/USD. Last week gold price declined below the 2014 support at $1323. Also pay attention to the weekly “bearish engulfing” candle. We need to see a fix above the “double bottom” neckline at $1435 – far above the current price levels – to confirm the long-term bullish reversal.
It is now becoming clear the gold Q1 recovery was a temporary correction. We would recommend selling XAU/USD at highs with an initial target of $1280.
Chart. Gold Daily
To contact the writer of this story: Kira Iukhtenko, firstname.lastname@example.org