Gold Lower As Dollar Strengthens
Gold prices gave back some ground today as stocks fell and the dollar index rose. Many are still wondering if the recent volatility seen in stocks is over. Judging by the V bottom made on the daily chart, stocks may have put in a near-term bottom. This could be potentially bearish for gold prices as investors look to continue to ride the stock market higher. Perhaps the even bigger story right now when it comes to gold, however, is the dollar and the euro. The dollar index appears to be heading back to its recent highs as the euro continues to drop. This drop in the euro is likely based on the notion that the ECB will be forced to act with additional stimulus measures in order to combat its slowing economy.
While gold has seen some recent upside after bouncing sharply off of support in the $1183 area, the market is by no means out of the woods. The gold bulls still have much to prove in order to attract more fresh longs into the market. The rally seen since gold bottomed recently around $1183 may prove to be short-lived if the dollar does not let up and equities stabilize and/or start moving higher again.
A drop below the $1183 level in gold prices could potentially set the stage for a significant leg lower in the price of gold that could potentially see gold prices target the $1000 level on the downside.
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