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Gold flat as stocks sell-off

Gold prices did not do much of anything Monday as stocks came under some decent pressure. The fact that gold cannot seem to catch a bid in light of stock weakness today is possibly not a good sign for the bulls. Gold continues to appear to be headed for a re-test of the $1185-$1200 levels. A break down below these levels could potentially set the stage for another significant leg lower in gold prices. In fact, the yellow metal could potentially work its way down to the $1000 level in the coming months. Gold simply continues to lack any real bullish catalyst, and in the absence of one will likely continue to trade lower on technicals and bearish sentiment. Speaking of sentiment, however, it does seem that bearish sentiment surrounding the precious metals complex is getting a bit extreme. The possibility of a relief rally at some point is certainly present, but until proven otherwise gold may remain a seller's market.

Equity strength as well as dollar index strength are two of the primary factors driving gold lower currently. The dollar could potentially have considerable upside to go, and as such gold may remain under pressure. Although stocks are down sharply today, the market overall has not yet suggested that a top is in place. While topping is more of a process, it would seem that gold may not find adequate buying interest to sustain a rally until such time as investors start looking to reallocate some assets. There simply is no telling when that may be. In addition, the notion of higher interest rates is not doing the gold bulls any favors either. While the overall trend may remain down, a short-covering rally is becoming more and more likely at some point.

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23 Sep 2014 | Categories: Gold

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