Gold fell on Tuesday, as traders watched the headlines of talks between the Iranians and Americans have been put on hold as the two sides disagree on fundamental issues.
This is Chris Lewis looking at the gold market. Gold fell pretty hard during the trading session on Tuesday as interest rates in America jumped. This of course has a major influence on gold as the cost of storage in gold and the non-yielding aspect of the asset works against it when interest rates rise.
We now see a potential drop towards the $4,600 level, an area that should be supported but also keep in mind a lot of what we are seeing right now has to do with stagnation in the Middle East. It certainly looks like the talks with the Iranians are off and if that is going to be the case, then it is certainly going to work against the value of pretty much anything but the US dollar and maybe oil.
Geopolitical Stagnation and the US Dollar
So, with this, I believe you have a scenario where traders are looking to run to the dollar, driving down the value of gold, but if we get some type of positive sign, then the $4,600 level holds. If we break down below there, then the $4,400 level could be targeted, but really when you look at this chart, it almost looks like it needs to roll over again.
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The 200-day EMA is all the way down at the $4,300 level and that is a bit of a floor. We are still in an uptrend, but we are really starting to test that idea. I think this unfortunately is driven by the latest headlines and because of that, the only thing you can do is keep your position size reasonable.
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