Gold is Losing in Value but Investors Don’t Need Safe Have Assets Right Now

By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

In the middle of April, gold prices continue falling. The precious metal is currently trading at $1,290.20 per ounce, while the highest level reached this month was $1,314.70. Right now, when the entire investment world requires no “safe haven” assets, demand for gold is extremely low.

At the same time, the U.S. dollar (USD) itself also doesn’t look quite well in global markets due to the same reason. As long as external background is quite calm (even events in Syria and Libya were able to trigger only a short-term reaction) and informational flow doesn’t offer any “hot” news, global investors are intent to continue buying risk assets. In this case, both gold and the American dollar have no value as “safe haven” assets.

There will be at least two news hooks that may be significant for gold in the nearest future. The first of them is relating to the threats announced by the USA to introduce additional import fees for European manufacturing companies. So far, this is just rhetoric because Washington is very unlikely to implement trade wars on two fronts. It still has to de-escalate its conflict with China first. However, the sheer fact of possible complications is quite negative for stock exchanges and may drive up demand for gold as a “safe haven” asset. The second trigger is USD behavior, which may fall against the European currency under pressure from mixed macroeconomic data and intent by the U.S. Federal Reserve to keep its benchmark rate intact this year.

As we can see in the daily chart, gold is trading downwards under serious pressure. As of today, the price has broken a significant resistance level at $1,292.00 (technically, it’s a confirmation of breaking 50.0% on the Stochastic Oscillator) and may continue falling towards $1,260.00 near the downside border of the descending channel. This decline is also confirmed by Oscillator; it may continue until the instrument enters the “oversold zone” and starts to reverse. From the technical point of view, the descending channel is looking like a correctional one.

Resistance levels: 1,279.50, 1,260.00, and 1,236.50

Support level: 1,291.60, 1,279.50, and 1,260.00

In the H4 chart, the downtrend continues; the decline is confirmed by breakout of 0 to the downside on MACD and may continue to reach 1260.00. After the instrument reaches this target and convergences are formed at indicator’s lows, the price may start a new correction towards 1292.00.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Having majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.

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