Gold has proven once again that it remains a favorite for speculative forces which have the ability to challenge trends and crave volatility.
As of this writing Gold is near important support as it traverses slightly above the 1760.00 level with rather fast trading conditions prevailing. A low of nearly 1741.00 was seen yesterday as global markets gyrated with the rather steep selloff in equity indices. However Gold has seen a bearish trend short term essentially embraced since the 15th of September, when the price of the precious metal was near 1806.00.
On the 3rd of September Gold was trading near 1833.00 and had seemingly found a bullish run that indicated buying may remain strong. Proving this was wrong in a rather demonstrative fashion, gold has slumped in the past two and half weeks rather consistently. Even as global equities have proven rather vulnerable, the precious metal has not found a slew of takers and the price of gold has slumped.
Yesterday’s low of nearly 1741.00 had last been seen on the 11th and 12th of August, which was only one week after gold’s flash crash that was likely caused by speculative forces. While gold certainly continues to be a hallmark for safe haven investors and as an inflation hedge, the precious metal is not immune to price fluctuations which it suffers from on the futures markets. As a long term buy, gold has a history of proving investors correct. As a short term speculative endeavor, gold must be treated like every other financial asset which carries a vast amount of potential volatility.
Support for gold around the 1760.00 to 1755.00 ratios looks to be important and if these levels are challenged could signal additional tests of downside momentum may occur. However if prices are able to be sustained above the current support levels it may indicate bullish speculators think that gold has been oversold in the short term and may be ready to display some power.
Gold is speculative at this time because of the rather large amount of nervous sentiment within the global markets due to rather conflicted U.S data, and concerns regarding China’s handling of a potential financial crisis due to the failure of Evergrande. Speculators who believe Gold will rebound and want to be buyers using current support levels as stop loss ratios while looking for upside action may be making a rather logical wager.
Gold Short Term Outlook:
Current Resistance: 1768.00
Current Support: 1754.00
High Target: 1780.00
Low Target: 1745.00