Tactics and Analysis, July 11, 2017 – Gold’s Dangerous Conditions Remain

The Gold market has been anything but calm the past two weeks. Yesterday’s tight range for the precious metal should not be taken as a sign that the Gold market has suddenly turned tranquil. Traders should expect fast conditions and volatility to continue.

Gold’s Downturn Unnerving Traders

Gold enjoyed a rather unspectacular day of results of Monday. However, the reason the quiet results are noteworthy, is because of the selloff Gold suffered before going into the weekend. For the second time in two weeks, the precious metal saw a violent and steep decline take place in a matter of minutes.

The 1210.00 U.S Dollars an ounce level appears to be an important short term focal point, but Gold’s value is likely to see further tests in the days to come. Traders have been unnerved by the sudden volatility from the precious metal as they monitor its price action.

Negative Momentum Mounts

A look at a mid-term chart continues to reflect the downside momentum which has taken hold in the Gold market. After reaching 1290.00 U.S Dollars an ounce in early June, the precious metal has experienced three rather significant selling events.

Investors in Gold have been hurt by the sudden emergence of potentially hawkish global central banks. While traders knew the U.S Federal Reserve would raise its interest rate hike almost a month ago, market participants did not count upon the European Central Bank and its President, Mario Draghi, essentially saying it would begin to tighten monetary policy early next year.

Long Term and Speculative Influences

The European Central Bank’s monetary policy meeting next Thursday on June the 20^th will be significant for Gold traders.

Gold appears to be testing important support levels in the short term, but many investors like to take a long-term view with the precious metal. The ECB is not going to raise its interest rate next week, but President Draghi’s Press Conference will be highly anticipated.

Traders want clarity regarding changes to interest rates, and until then speculators who have the courage to participate in the volatile Gold market will find plenty of opportunities. But because of the rapid price fluctuations risk management is essential.

In the short term, we believe Gold may be negative. In the mid-term and long-term we are unbiased.

Yaron Mazor is a senior analyst at SuperTraderTV.

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