Gold Bulls Hoping For Value Buyers To Step In
Today’s Spotlight Market
Gold futures are trading near their lowest levels since late January due to lackluster investment demand for the metal.? Equities have had a strong start to the new month, bolstered by positive economic data.? This seems to have whet investors’ appetites for risk at the expense of safe haven investments, such as precious metals.? Traders will soon have plenty of job data to digest, as the first week of the month brings all major jobs reports.? As prices approach the key chart and psychological support level of 1200, Gold bulls are hoping the price declines will prompt value buyers of the metal to step in.
Fundamentals
It is not only the risk-on attitude from stock investors that has Gold bulls singing the blues, as the US Dollar index has rebounded since the middle part of May.? The index was threatening a downside breakout below the critical 79.00 level, but the greenback averted this setback and could be poised to take on near-term resistance at 81.31.? Traders also believe the Federal Reserve is far from done with regard to its reduction in asset purchases.? Decreased asset purchases could be seen as positive for the greenback and, more importantly for Gold traders, decreases the likelihood that the central bank will allow inflation to run away from them.? In addition to the plethora of US job data this week, the ECB will be meeting and will have a rate decision on Thursday.? Tamer inflation in Europe is expected to prompt the central bank to ease interest rates.? If this is indeed the case, the US Dollar could find additional support, which may negatively impact metal prices.
Technical Notes? -? View Today’s Chart
Turning to the continuation chart, we see the August Gold contract breaking out of a wedge formation to the downside.? The August contract is trading near minor support around the 1235 mark.? If Gold prices are unable to hold the level, traders may wish to keep an eye on the 1200 level.? Not only is this chart support, but failure to hold the 1200 mark could be a psychological setback for metal bulls.? Due to recent negative price action, the RSI indicator is showing oversold levels, which could be seen as slightly positive in the near-term.?
———————————————————————————————-
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.