Gold prices are attempting to rebound after making a low last night at $1183.30. This 15-month low may have also formed both a triple-bottom pattern and a bullish butterfly pattern. The precipitous weakness hitting the yellow metal may be overdue for a short-covering rally.
Gold has now erased all of its gains for 2014 and many believe that the metal is likely to have further downside in its future. If the U.S. dollar rally continues on the news of an improving Fed outlook for higher interest rates, gold prices may attempt to make a fall towards the psychological $1000 level.
The precious metal was once a favorite trade by many as it had an amazing bullish run from the 2001 low of $255 to the record high of $1,923.70 that was made in 2011. Prices fell 28% last year and we are currently seeing banks lower their 12-month forecasts. Goldman Sachs is looking for the precious metal to reach $1050, and Societe Generale targets a fall below $1002.
Gold appears to be losing its lusters and the key range I will target fo the rest of the year may be $1000-$1250.
The trade: Sell Gold at $1,215 with a stop loss at $1,235 and a take profit at $1,175. The Risk/Reward Ratio is 1: 2
Edward J. Moya
WorldWideMarkets Online Trading