Gold Is Trending Downward (GLD)
$GLD
Gold is trend in a downward direction. So, speculative trend followers are doing what they have been doing for the past several years, selling into the rallies. This strategy has been successful and they will therefore do it for as long as possible and until proven wrong.
Gold Bears will only be proven wrong when some Key resistance marks start to break down.
For now though, no such mark has been taken out with Gold failing to crack the Support-turned-Resistance and 61.8% Fibo retracement mark of its most recent downswing, at 1142/3 this week.
The Bearish trend line that goes back to the beginning of this year has stayed intact while both the 50 and 200-Day MA’s are pointing South. Therefore the trend is clearly Bearish in here, and there is a good chance it will remain that way for some time given the weak fundamental drivers of Gold.
The lack of apparent safe-haven buying Tuesday is a sign for concern.
If the precious Yellow metal fails to rally on days like Tuesday then imagine what it might do if and when the equity markets rally.
So, for now maintain a Bearish outlook on Gold. As such , see the prospects of a break below the short-term Bullish trend line as a higher probability, against a break to the Northside. If this happens, Gold may then go on to break below the next Key support at 1100, then revisit the August low at 1077.
Should Gold manage to find strong support and rallies above the Bearish trend line then will drop the near-term Bearish bias.
As technical analysts and traders let price action determine the direction and then trade in that direction.
India, the world’s 2nd-biggest Gold buyer after China, imposed the import restrictions last year to avert a trade deficit crisis that pushed the Rupee to record lows.
“Restrictions placed on import of Gold… stand withdrawn with immediate effect,” India’s central bank said in a statement on Saturday, 29 November.
Support for Spot Gold comes from jewelry demand from India in the lead up to and during the wedding season, which starts again in late September. India did record a 176% increase in Gold imports in August to US$2-B from about US$756-M.
Overall, the impact of wedding season Spot Gold buying has faded in recent times as India is no longer the world’s largest Gold consumer, partly because of the on-going government import restrictions on precious metals. If they are further relaxed, perhaps India will regain its Top spot.
India’s Akshaya Tritiya festival considered by India’s more than 900-M Hindus as an auspicious day to buyGold and Silver, fell on 21 April this year. Bullion is bought in India during festivals and marriages as part of the bridal trousseau or gifted in the form of jewelry by relatives.
Stay tuned….
HeffX-LTN
Paul Ebeling
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