Gold continues to struggleOn Wednesdy gold slumped below $1,900 per ounce to hit its lowest level since March this year. Some analysts blame the dollar for this, pointing out that gold is negatively correlated with the US dollar. In fact, while this can be the case, there are plenty of times in history when the two have risen together, fallen together or completely ignored each other. It’s best to treat the two separately when it comes to trading. The big question now is whether gold will continue to slide or find support and manage to recover?
The precious metals complex, which includes silver, ETFs and individual mining stocks, is in the doldrums, but also looking fairly oversold. That means nothing on its own, as markets can remain 'oversold' or 'overbought' for much longer than most of us would deem reasonable. But the bears should probably be a bit cautious now with the down-trend in gold being around 5 months' old. The chart suggests that there could be some more downside, although the area around $1,800 could offer significant support, were we to get there.
But in terms of recent swings, bear in mind that last November gold was trading around $1,630 yet 6 months later it hit an all-time high above $2,080.
