The gold price retreated to 8-month lows and hovered around the $1,770.50/oz mark on Friday, February 19. The main reason for this downtrend is appreciation the US dollar due to rallying US government bond yields. The market is confident that the American economy will stage a rapid turnaround, so players are piling into bonds.
What’s more, technical signals are sending out a clear message. After breaking through the $1777-1787 support level, the bears traded gold down to $1,770 and this target was successfully reached. So where does the commodity go from here?
In our view, sellers will try to push gold prices even lower, with their sights currently set on $1,750/oz. There is every reason to expect this level to be reached. However, the lower the precious metal goes, the higher the market’s interest will be. In the investment world, there are still no other analogs that can match gold, no matter how much some players would like to pass off Bitcoin, for example, as a real competitor.