Is Gold Not So “Precious” in Traders’ Minds?
????? Fundamentals
Gold futures prices have slumped to 1-month lows, with some investors starting to shift assets from the “yellow metal” and back into equities, as new highs are made in most major U.S. stock markets. In addition to an investment shift back towards “risk assets”, some bullion traders note that physical trading activity has slowed lately, as most of the leading Asian markets are closed for the Lunar New Year holiday.
If we focus on the longer-term prospects for Gold prices, some traders may want to keep their eyes focused on events occurring in India, the world’s leading physical Gold consumer. The Indian government recently raised Gold import tariffs, with the intent on discouraging physical Gold purchases or investment in hopes that Indian investors will start to diversify away from Gold and, hopefully, spur investment into other assets.
If this ploy is successful, we could see physical Gold buying begin to slow, which would take away some of the “support” for prices we have seen in the past from Indian buyers during periods of price declines.
???? Technical Notes
Looking at the daily continuation chart for Gold futures, we notice prices have fallen below both the 20 and 200-day moving averages, putting long and short-term bears in charge. Prices are down about $150 per ounce since recent highs were made back in October of last year, and it appears that we may have entered a consolidation phase, with prices becoming more stable between 1650.00 and 1700.00.
The 14-day RSI is turning weak, with a current reading of 41.00. The “spike” low of 1626.00 made on January 4th looks to be strong support for April Gold, with resistance found at the January 17th high of 1697.80.
———————————————————————————————
Disclaimers
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the “”Disclosure Statement for Futures and Options”” prior to investing in futures or options.
For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.