Gold’s Glitter Is Lackluster

by on June 28, 2013 2:17 am BST

Gold is on it’s worst year since 1981 as prices fell yet again to a new low since August 2010 1,196.98 a troy ounce. Traders are increasing growing weary on both sides. Gold’s major declines reckon there may be increase demand, but the overwhelmingly bearish sentiment may scare traders of farther loses. According to a Bloomberg survey, 15 analysts believe there will be an increase in price while 14 were bearish and three neutral.

The question is not whether it will increase, but will there be enough demand to overturn the steep price plunges. No, I do not believe it will given the current environment. With an ultimate target of 1,038, I stand at the lows of estimates (even lower than well-known large financial institutions). It is likely gold will close below 1,225 per ounce with 1,150 in the crosshairs.

Gold currently resides at 1,190.1, -21.5.

The weekly chart is updated with the current declines which show a clear direction:

Technically hazardous news, the 20 EMA is heading down to the 200 EMA. A cross below the 200 EMA will accelerate loses.

Weekly of GC

Weekly of GC

However, gold is mercurial and can swing either way. Nevertheless, the long-term trade is not north, but traders should be prepared to either swing trade or adjust positions for any retrace. While looking at the 4H chart, a retrace to 1,225 is valid but  strong resistance is expected. If by the grace of global gold bugs, the next potential upside would be around the 20 EMA at 1,238.

4H of GC

4H of GC

There is moderate economic data on the books in regards to the dollar. Any shift in the Michigan Consumer Sentiment will effect the dollar which will affect gold. If it falls short of expectations, and being a Friday, the upside retrace is possible. If data beats expectations, look for gold to push lower towards 1,150 an ounce.