Gold Price Forecast – Gold breaks down against US dollar strengthGold markets fell during the US session on Tuesday, as the greenback continues to see buying pressure. We are approaching a significant support level though, so I think that we will probably get a short-term bounce.
Gold markets have broken down somewhat significantly during the trading session on Tuesday, breaking below the $1230 level. This market does have a significant amount of support at the $1225 level just below, and even more support at the $1200 level after that. With the US dollar gain the way it has, it’s not a huge surprise that gold market sold off. I think that the market participants will continue to sell rallies in the short term, but if we can get some type of turnaround in the greenback, then we could see buyers for gold.
I believe that the gold market will continue to be very negative in the short term, but somewhere near the $1200 I would anticipate quite a bit of bullish pressure and demand for gold. If we were to break down below the $1200 level, this would be a complete capitulation yet again, and could send this market as low as $1000. I do believe that the buyers come back rather soon though, because we have far too much in the way of overextension at this point, and of course demand at every $25. On some type of rally, I expect the $1250 level above would be massive supply that would be difficult to overcome. We would need to see currencies move quickly against the US dollar for that to happen, but right now that doesn’t seem likely. I believe we continue to grind lower towards the $1200 level in the interim, where we will make much bigger decisions going forward.