Originally published by AxiTrader
Gold made a low around $1260/61 overnight. That's the lowest it's fallen to since the low around the same level back two months ago at the beginning of October.
It's also the bottom of this roughly $40 range I've been writing about and talking about in my videos each day for the past month or two.
It's a huge level and it has to hold if gold is to avoid slipping lower.
I'll get to that, and the price action, in a moment. But it's worth wondering what ails gold right here and now and why it appears to have an irrelevance in investors and traders minds right now.
Some commentators hypothise that gold's place as the "anti-money", anti-fiat currency asset in global markets has been usurped by the rise of (Bitcoin) and other cryptocurrencies. It's difficult to know - as it's way too early - if Bitcoin has actually taken this role and safe haven asset status from gold. But I do have some sympathy with that view, at least at the margin.
More likely though, and something I believe strongly, is that gold is suffering under the combined weight of an overall positive global growth backdrop, generally ebullient investor and trader mood, coupled with the rise in the front end of the US bond curve.
Certainly the market - and longer bond traders - aren't convinced that inflation is coming back or that long rates will increase materially (something I do happen to believe will occur in 2018) but there is a growing school of thought that says the fed may have to up the ante on interest rates now that it appears the Trump tax cuts will become reality.
So gold is pressured by rising rates and investor mood as much as anything else.
Which brings me to the chart and this very important $1260/63 region.
$1263 is the 61.8% retracement level of the rally from $1204 to $1357 between July and September this year. $1260/61 is the recent low and essentially the respect of this level as both days it touched the low - including overnight - gold bounced back to close above $1263.
Recently prices have been trapped in a rage which included this low and the 50% retracement of the fall from above $1300 to the $1260/61 region.
That sets up a potential for a move down to $1223 which is the 138.2% Fibonacci projection of this recent fall and range - that's one of my favourite setups - if $1260 gives way.
Naturally, it has to give way first. For the moment gold is just $1260-$1300.
Here's the chart - messy I know. But this is important.
Have a great day's trading.