Gold forms Golden Death cross on charts; down 5% in 6 months of 2018

Golden Death cross is a technical pattern which is formed when a 50-period moving average crosses below a 200 period moving average.

Battling between the bullish and bearish macros, gold prices failed to win hearts of its investors giving a negative return of around 5 percent for the year 2018.

Commodity Market Tips

A bearish chart pattern “Death Cross” has materialized in gold, indicating that the precious metal is likely to extend a recent downtrend that has dragged it to its lowest level in 2018.

Golden Death cross is a technical pattern which is formed when a 50-period moving average crosses below a 200 period moving average. The pattern which was prior seen in this commodity in November of 2016 had witnessed a decline of more than $50 in the metals prices.

Gold has yet again failed to cross the 38.2 percent retracement levels ($1,380) of the fall from $1,920 to $1,046. With the weekly RSI dropped to below 37 levels in a lower top lower bottom formation since April 2018 it is evident that there is some weakness in the prices.

Immediate support for gold is seen at $1,237 a level which is derived by connecting Nov 2015 low of $1,046. A breach below the same may trigger a further downside towards $1,210-$1,207 levels. On the upside, we might face a resistance at $1,273 and $1,285 levels.

The recent downdraft in gold can be attributed to the dollar that has strengthened sharply against its rivals over the past several weeks, as the Federal Reserve, continues its plan to raise benchmark interest rates, bullish for the greenback.

The dollar against gold has been trading at the 11-month highs and has appreciated over 7.5 to 8 percent from the lows of 2018.

Federal Reserve officials raised interest rates for the second time this year and upgraded their forecast to four total increases in 2018 as unemployment falls and inflation overshoots their target faster than previously projected.

European Central Bank too has outlined plans to end its easy-money policies, joining the Federal Reserve in rolling back its quantitative easing initiatives.

Rising trade war concerns between the US and other major economies like China may limit a significant downside in the prices; however, we may witness increased volatility in the yellow metal.

On the domestic front, the fall may also be limited amid weakening rupee which hit the 19 months low yesterday. INR has been depreciating amid rising crude oil prices and the geopolitical worries.

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Disclaimer:- The views and investment tips expressed by investment experts are their own. Ripples Advisory advises users to check with certified experts before taking any investment decisions.


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