After a long bull run of 13 years, gold peaked at 1,920 in 2011. Gold almost doubled from 2008 to 2011. At that time, the Fed bought debt bonds and kept the interest rates at 0% which boosted the economy. The demand rise in India and China increased the overall demand for gold. Keeping on pumping the cheap money into the economy resulted in a hike of the financial markets to historical highs. Now it is time for the Fed to scale back its bond buying program.
From the beginning of December, gold short bets has been increased a lot. We mentioned it in the previous article. The technical picture is that gold is holding its previous low at 1,211 and arrested at 1,268. It is trading in a tight range now, it is unable to break higher resistance levels. That shows weakness of purchasing power. There is less interest in the gold bull market. From today’s Fed meeting, we can expect that there is no cruel tapering but trimming of the bond buying program.
Intra view
Support: 1,220, 1,205-1,195, below 1,180.
Resistance: 1,278, above that 1,300.
1,200 is the key level for mining companies. If gold closes below 1,200, it is expected to drop further to lower levels. It will cause production and job cut by mining companies. It is an uneconomical level.
We expect the downfall is limited from the current levels, cmp 1,230. Long-term traders start accumulating gold on lower levels.
If the Fed continues its purchasing program, gold will be hit badly. Mark Faber is expecting the Fed will not go for tapering.
The material has been provided by InstaForex Company – www.instaforex.com
After a long bull run of 13 years, gold peaked at 1,920 in 2011. Gold almost doubled from 2008 to 2011. At that time, the Fed bought debt bonds and kept the interest rates at 0% which boosted the economy. The demand rise in India and China increased the overall demand for gold. Keeping on pumping the cheap money into the economy resulted in a hike of the financial markets to historical highs. Now it is time for the Fed to scale back its bond buying program.
From the beginning of December, gold short bets has been increased a lot. We mentioned it in the previous article. The technical picture is that gold is holding its previous low at 1,211 and arrested at 1,268. It is trading in a tight range now, it is unable to break higher resistance levels. That shows weakness of purchasing power. There is less interest in the gold bull market. From today’s Fed meeting, we can expect that there is no cruel tapering but trimming of the bond buying program.
Intra view
Support: 1,220, 1,205-1,195, below 1,180.
Resistance: 1,278, above that 1,300.
1,200 is the key level for mining companies. If gold closes below 1,200, it is expected to drop further to lower levels. It will cause production and job cut by mining companies. It is an uneconomical level.
We expect the downfall is limited from the current levels, cmp 1,230. Long-term traders start accumulating gold on lower levels.
If the Fed continues its purchasing program, gold will be hit badly. Mark Faber is expecting the Fed will not go for tapering.
The material has been provided by InstaForex Company – www.instaforex.com
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