On Wednesday morning, support for gold around $5,000 per ounce finally crumbled. This led to a cascading price collapse, which coincided with a rally in the US dollar. This only came to a halt yesterday, early afternoon, as gold flopped towards $4,500. Coincidentally, this was roughly in line with the recent high in the Dollar Index. But while the dollar proceeded to sell off sharply, gold’s rally looked pretty half-hearted.
Nevertheless, it managed to creep back up above $4,650 this morning. Could yesterday’s slump mark the end of gold’s pullback from January’s record high? It’s possible. But the bears will also be looking at the recent cycle low of $4,400 just after January’s blow-off top as a likely downside target.
Source: TN Trader
While others will be eyeing up $4,000 which acted as significant support last November. Much depends on sentiment going into the weekend, as a rebound is also a possibility. One thing is for sure: there is a dwindling number of investors out there who still view gold as a ‘safe haven’. But that’s a shame, because it certainly is. But it’s a ‘flight to safety’ on currency risk, and for now, investors still have faith in the greenback.
