Gold sell

Strong U.S. economic data are negative for gold

24 April 2023 56
AntonVolkov
AntonVolkov

Listed among the best MarketCheese authors
1st in the segment "Oil and gas"
2nd in the segments "Currencies" and "Metals"

Gold prices ended last week with a 1.1% fall, still failing to return to their stable level above $2,000 per ounce. On Monday morning the main precious metal is not attempting to grow as well. The majority of the market participants are possibly waiting for even lower gold prices to resume buying. Demand might rise at deepening of gold’s correction to the level of $1,950.


Gold’s fall below $2,000 per ounce undermined the short-term bullish trend in the precious metals market. Better-than-expected PMI data in the U.S. and the risk of sustained high inflation caused gold prices to decline to their 2-week low. According to most Wall Street analysts, the prices still have room for further fall in the near future.


Sean Lusk from Walsh Trading considers gold’s decline to $1,930 per ounce possible. Any tightening of monetary policy conditions increases pressure on the yellow metal. However, Lusk believes that significant falls in gold prices still will be redeemed, therefore, bears should be more careful and fix short positions in time.


Adrian Day, CEO of Adrian Day Asset Management, is bearish for gold in the near term due to a change in rate hikes expectations. He thinks that the rise in prices for the precious metal in March and early April was too fast. Traders were overly optimistic, expecting a sooner reverse in the U.S. Fed’s policy. Now the situation is correcting, and with around 90% probability there will be another Fed’s rate hike by 0.25% on May 3.


The current target for sellers in the gold market is to move to the range of 1,950–1,955. There are April’s lows and February’s highs, so these levels are good for closing short positions. Further, bulls’ activity is expected.

 


The following trading strategy may be offered:


Sell gold in the range of 1,975–1,985. Take profit – 1,955. Stop loss – 2,005.


Traders may also use the Trailing stop instead of the fixed Stop loss at their discretion.

This content is for informational purposes only and is not intended to be investing advice.

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AntonVolkov
AntonVolkov

Listed among the best MarketCheese authors
1st in the segment "Oil and gas"
2nd in the segments "Currencies" and "Metals"
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