Can India Cool off Gold Bears?
??? Fundamentals
Gold futures have been stuck in a rut in recent weeks, as fears of slower growth have overtaken inflation concerns. The inability of prices to break through the 1800 level had a negative psychological impact on the market, triggering profit taking. There is some hope that the start of the festival season in India may spur physical buying of the metal. What effect Indian festivals have on prices remains to be seen, as this is a seasonal factor already priced into the market. Equity markets may have a major impact on the price of Gold. This earnings season has gotten off to a very weak start, which may continue to plague commodity markets.
?? Technical Notes
Turning to the chart, we see the December Gold chart trading near support at the 1700 mark. The recent sell-off began after the third failed attempt to break through the 1800 level, over the past year. Prices are now below the 50-day moving average, which can be seen as bearish. The recent selling has resulted in the RSI indicator being in oversold territory, which could trigger some short covering and value buying.
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