Gold sell

Strong data on the U.S. economy reduces gold demand

28 June 2023 202
Strong data on the U.S. economy reduces gold demand

Gold prices are still unable to overcome the negative sentiment of market participants. Today the yellow metal’s price fell under $1910 per ounce for the first time since mid-March. There is a chance that the price will test or even break down the important level of 1900. There will probably be a tough fight for this level, but at the moment, bears seem stronger.


Gold sales accelerated after yesterday's U.S. economic data release. Almost all data turned out to be better than expected: the number of home purchases rose to a record high of more than a year, and the consumer confidence index reached its highest level since early 2022. At the same time, U.S. home prices rose for the third month in a row.


Gold came under pressure from two sides. Firstly, positive economic statistics reduce fears about a possible recession, and gold as a safe haven asset is no longer in high demand. Secondly, a stable condition of the economy allows the Fed to continue tightening its monetary policy, which obviously can't benefit the yellow metal as well.


No wonder that analysts are gradually worsening their forecasts for the price of gold amid such news background. Georgette Boel, senior economist at ABN AMRO, speaks of lowering the forecasts for gold from 2200 to 2000 dollars per ounce by the end of 2023. The main reason for that is the tougher monetary policy of the Fed. According to Boehl, high interest rates and a stronger dollar won't allow gold to set new historic highs at least until next year.


The gold chart indicates that the decline continues. In the near future the price can head to the level of 1900. It will not be easy to hold below that level, but in case of success, the yellow metal sellers will significantly increase their activity. A further decline in gold to the next key level of 1890 would confirm a breakdown of the 1900 level.


Consider the following trading strategy: 


Sell gold in the 1910–1920 range. Take profit 1 — 1900. Take profit 2 — 1890. Stop loss — 1940.

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

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