The dollar hit a four-year peak compared to major currencies today, and while the dollar is moving higher, the gold is declining. The dollar is moving higher as everyone have all their eyes on the expectations of interest rate in the U.S right now.
Strong economic data could prompt the U.S central bank to raise interest rates faster and sooner than expected, and that could boost the dollar. The pressure on gold from a stronger dollar was mitigated by a fall in equity markets after Honk Kong riot police advanced on pro-democracy protesters in the worst unrest since China took over the former British colony two decades ago. Gold is traditionally seen as an alternative investment during times of political instability.
Gold is still in a bearish territory. At the end of last year, the precious metal started to move higher. We saw higher highs and people were bullish. It was a positive sign, but it was a positive sign in a negative trend.
The precious metal is still declining and it is just a matter of time before we see a test of the critical support at $1,185. Gold moved higher when the U.S forces began bombing raids in Syria, but gold is down together with Silver, which is below $18 right now.
We can see the same trend in Platinum, which moved sharply lower, down almost $40, and palladium down almost $30, so Gold continues to get more expensive relative to its precious cousins.
A portfolio should contain about 10% of precious metals, because as we have seen over the past decades, gold can cushion an investment portfolio during times of crises. Right now we are at a very interesting and perhaps critical juncture with respect to the direction of the gold price as it approaches a key support level.
It can move up and it can move down, and I`m following some key support and resistance levels for the precious metals. The gold price can move down to $1000 and below. It all depends on happenings around the world.
The signals out there is mixed which makes the bulls and bears very frustrated. That`s why it is important to trade what you see, not what you think. I`m exited about the coming weeks and moths.
