Abshire-Smith - Analytics


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    Gold…..how low can it go?

    This morning we’ve seen the price of Gold reach its lowest level since 2010, momentarily trading as low as 1063.73 / oz as a strong USD holds the value down.

    This level is the culmination of a drastic month for the precious metal as we’ve seen it nose dive over $100 since the peak of 1191.30 on 15th October. Bullion prices have actually fallen 15 out of 16 sessions as investors are bracing themselves for the first US interest rate hike in nearly a decade.

    Futures data is highlighting a 66% chance of a Fed rate-rise in December which is only helping to drive the price of Gold lower. We did see a knee-jerk reaction on Monday following the terrorist attacks in Paris with an increase in demand pushing the price up 1.3% at one stage but this move was quickly eroded as we actually ended the day in negative territory once more.

    We are also seeing a push on the other precious metals. Copper, which is known as an important indicator of global economic health has seen its price drop 2.4% to 7 year lows. Cooper miners and traders are constantly trying to gauge events in China which constitutes for 45% of global copper demand.

    So, how low can the price of Gold go?

    $1,000 / oz or thereabouts is widely seen as key level of support, this represents a strong resistance level back during the 2008 financial crisis and if technical theory is to be believed this now becomes support. Should this level be breached and the global run on commodities continues with the USD continuing to strengthen across the board, a daily / weekly bar close below $1000 any time soon could see the run on Gold intensify further bringing $950 into focus.

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