Gold Price Vulnerable as the USD Strengthens

Published by
Written By: Mircea Vasiu
Share
    Summary:
  • Gold price trades with a bearish tone but remains in neutral territory. Both bulls and bears have a case here, with bears pushing harder.

Gold price tumbled recently as it was rejected again from the $1,950 level. At this point, it appears as consolidating on the bigger timeframes, unable to distance itself much from the $2,000 level.

The price of gold is viewed as the perfect hedge against inflation. In other words, on a lower USD, the price of gold should rise. However, the last few months saw a divergence from this correlation, as the dollar declined while the price of gold declined as well.

Moving forward, if the dollar’s strength is set to continue, we may see it accelerating while the price of gold to keep staying close to $2,000. In other words, a stronger dollar and stable gold makes sense considering the divergence in the last months.

Gold Price Technical Analysis

At this point, the price of going is in neutral territory. Bulls may want to go on the long side should the market break above the $1,950 level, while bears focus on the price breaking previous support.

Aggressive traders may want to short at market and target a break of the support in the wake of ongoing dollar strength. If that is the case, they would want to place the stop above $1,950 and set a risk-reward ratio bigger than 1:2 or even more.

Gold Price Forecast

Written By: Mircea Vasiu

Mircea, MBA in International Business graduating Magna Cum Laudae, trades for a living and contributes to various financial publications for more than six years. He writes about macroeconomics, stock indices, currencies, and most recently ETFs and individual stocks. For the past decade, he’s involved in everything trading related, mostly in the currency market, both with manual and algorithmic trading.

Published by
Written By: Mircea Vasiu