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Will Gold trade below $1000 before 2015 ends?

Interest rate hike from the Federal Reserve in December is now very possibly with analysts estimating a 70% likelihood

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

The precious metals has had a disastrous year so far. The price has declined from a high of $1307 to below $1100 on Friday due to a better than expected jobless report in the US. Therefore, an interest rate hike from the Federal Reserve in December is now very possibly with analysts estimating a 70% likelihood.

US$ Strength

This is all bad news for Gold. There is a strong correlation between a strong dollar and falling Gold prices. The strength of the US$ can be seen by looking at the most traded currency pair in the world - EUR/USD. Since mid-October the exchange rate has fallen from levels around 1.1500 to below 1.0750. In exactly the same time span, Gold has reversed from a four month high at $1191 to losing in access of $100.  

Safe Haven

With a change in monetary policy looming on the horizon for the first time since the recession, the US$ strength in the market is visible across asset classes. Additionally, it seems as though Gold is continuing to lose its status as a safe haven in the financial markets. There has been no shortage of turmoil and volatility in the markets throughout 2015; however, the Gold price has been on the decline for most of the year. At best it was trading sideways with only small spurts of hope.  

China

The final dagger for the metal to fall below $1000 before the end of the year, could be increasingly worrying news out of China. The government just released that in October exports fell by 6.9% while imports dropped a whopping 18.8%. Worries about the 2nd biggest player in the global economy should be reason enough for Gold to be ticking back up. However, if we continue to see the price declining then we need to see a significant change towards the metal coming from somewhere which at this point in time seems rather unlikely.  

Outlook

The technical setup for Gold is not helping its cause. Gold is now trading below the psychologically important $1100 level. Earlier in August, we found support around $1080. If this level is significantly broken, the metal would be trading at 5 year lows and on the way down to $1000 there is little in the way. 

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.