The precious metal found buyers near the June lows which were in the 1181 region. Despite the tapering decision, the US dollar has actually remained fairly subdued and not even a better-than-expected GDP release could prevent a further slide. The inverse relationship between gold and USD/JPY remains intact as the gold recovery has coincided with USD/JPY dropping back below 104.
On that notion, a move back to last week’s highs at 104.64 for USD/JPY could see gold finally break through June lows. Gold has nearly lost its entire gain from June lows to August highs. While gold is experiencing a short term bounce, the reality is tapering is likely to continue next year as the US economy continues to show strong signs of improvement. This would be positive for the US dollar and continue to weigh on the precious metal. Rallies back into 1215 could be used as an opportunity for fresh selling. Alternatively momentum traders could look to sell on a break below 1181.