Gold Dives to Fresh 5 Year Low Without Any Particular Catalyst

20 July 2015, 06:42

Gold spot has collapsed in the Asian hours to the lowest levels since March 2010. In respect of the Fed, the way that the Fed handled QE and the tapering was seen as successful and we are en route for a 2015 rate hike, as underpinned by Yellen's testimony last week. A September rate hike maximizes the Fed's options. It could go again in December. That would be the two rate hikes that a slim majority of Fed officials thought would be appropriate in at the June meeting. Without hiking rates in September, the Fed loses that option
Despite the limited U.S. event risk scheduled for the week ahead, gold is unlikely to find a meaningful bid following the failure to hold above the March low (1142), and the previous metal may continue to search for support in the days ahead amid the broader decline in global commodity prices.
From a technical standpoint, gold has touched key support level at $1074 and the technical damage done leaves prices vulnerable while below 1100. Pair is currently trading back above $1100 levels. The broader picture remains weighted to the short-side with subsequent support objectives eyed at the 1.618% extension off the 2014 highs at 1100 backed by 1044/54.
Entry level is absent at this point of time, waiting for the clear cut opportunity in the upcoming hours.

Source : FX-Primus

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