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Just as my colleague David Madden wrote in his article earlier today, gold has been sliding due to taper fears.
With gold rallying to my suggested limit, the trade now seems to be going as planned, with both the fundamentals and technicals continuing to work against the precious metal. I feel moving stops down to $1255 makes sense given the increased event risk over the coming days.
Price action continues to favour moves to $1180 in the coming weeks, with the daily MACD heading lower and showing no signs of divergence. Stochastic’s are still not at extreme levels either and thus I feel we can see lower levels over time.
The ISM manufacturing print (released in US trade) not only beat expectations for the sixth month in a row, but also compliments the view that globally, manufacturing is in quite good health. The turn of the service sector surveys will be released over the next couple of days and it will be interesting to see if the service space shows the same sort of expansion. It then boils down to US jobs and Friday’s non-farm payrolls report, where a number above 190,000 will push gold down to my target.
There is of course physical demand, however that only goes so far, and the fast speculative money will be keen to increase short positions if the markets consensus for a March taper is tested.