GOLD ON THE VERGE OF BIG DECLINE

Pre-emptive sell call on Gold –

Gold has offered one of the best returns for investors over last decade. Gold prices have risen more than six-fold since the lows of 2001 in dollar terms.   After signalling death cross & breaking a very strong of $1515 support in February 2013, it was on consolidation zone. After that, it did bounce back of FED tapering delay and more importantly the Fiscal and Debt limit impasse in the USA.  Quantitative easing offered a huge boost to gold prices, since they try to depressed long-term interest rates to lower levels. This measure also helps dollar to get weak.  However, now, the US Federal reserve is attempting to boost growth, rather than devaluing the dollar. This is fundamentally a big change for long and larger perspective.

Recent Development

Presently, Gold prices showed some rebound & trading at $1239 on short covering weakness in dollar however technical still remained weak. There is a concern that FED may start early QE next month on the back of strong US Macro economic data. Secondly, we feel that, both US dollar index & US treasury indices are in consolidation zone with upward biased. With yield and currency gain around, fundamental player may turn away from Gold for better return.

Outlook

Short term

We feel that Gold is heading towards   a important support of $1200. In short term market has taken support of downward channel as market is trading in oversold territory so short covering is expected.  But from larger perspective,  Gold continues to remain a sell on rise.

Special opportunity

Technically, Gold is sitting on very crucial support at $ 1200. A weekly close below $1225 (as per weekly Bollinger band) or a close below $1200 (on daily basis)can  give us very good short opportunities.

If, $1200 level breached , then the real opportunists/ danger comes.  One should stay away from any gold trades on the long side  & should look for going short.  If gold fails at support, we’ll  eventually may see much lower level . Do not ventured out right now or try to pick bottom here. There could be freefall which may be quick.  Prepare for gold to eventually sink closer to $1,000 as this downtrend plays out. $1310 is the stop loss level.

This document is     prepared by BonPriya. One may reach me at – bonpriya@gmail.com

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