Gold's Upside Looks Over; Dollar Strength Here To Stay - BBHBy Sarah Benali of Kitco News
Monday February 13, 2017 11:11
(Kitco News) - Gold’s upside move is over. Just look at the technicals.
This was one technical analyst’s message on the first trading day of the week.
“Bullish dollar is negative for gold. [Gold’s] upside move began shortly after Fed hiked in mid-December and the move looks over,” Marc Chandler, Brown Brothers Harriman’s global head of currency strategy, told Kitco News in an email Monday.
Gold prices have fallen under pressure Monday, trading at daily lows as the U.S. dollar moves higher and U.S. equities hit new records. April Comex gold futures last traded at $1,224.20 an ounce, down $11.70 on the day.
The technical picture for gold is all but positive, Chandler continued, noting that there is a “bearish divergence in RSI, and MACDs is about to turn lower.”
“I anticipate a move back toward $1,168 and then $1,120,” he said.
In an email to clients Sunday, Chandler said the U.S. dollar has been carving out a bottom and its uptrend is likely to resume, pressuring gold. With the market expecting the Federal Reserve to remain on its rate-hike track this year and with President Trump’s policies likely to boost the greenback, the picture remains positive for the U.S. currency.
This also has Chandler calling for more upside in U.S. stock markets.
“All three major indices -- the S&P 500, the NASDAQ, and the Dow Jones Industrials -- saw record highs before the weekend,” he noted. “Our reading of the technical condition and psychology suggest a new leg up in the market has begun. Many asset managers have been reluctant to commit more money to the market without a pullback and clear visibility about the policies and priorities of the new administration.”