The Appreciating Dollar Could Pressure Short-Term Gold Prices
Ascending triangle pattern
Gold futures for June delivery showed a potential ascending triangle pattern on May 22, 2015. Commodities like gold prices have been oscillating between $1,180 and $1,220 per ounce for almost two months. The US dollar and demand from India are driving gold prices.
Support and resistance
The appreciating dollar will pressure gold prices. The support for gold is at $1,150 per ounce. Gold prices last hit this level in March 2015. Slowing demand could also push gold lower. On the other hand, increasing crude oil prices and growing demand from India will support gold prices. Gold could hit a resistance of $1,250 per ounce. Prices tested this mark in February 2015.
The trading range suggests prices could fluctuate broadly between $1,180 and $1,240 per ounce in the short term. The potential ascending triangle suggests prices will fall and then rise higher. Reuters surveys say that gold prices will average around $1,209 and $1,250 per ounce in 2015 and 2016, respectively.
The fall in gold prices negatively affects ETFs like the iShares Gold Trust (IAU). It also affects gold miners like Goldcorp (GG), AngloGold Ashanti (AU), and Yamana Gold (AUY). These stocks account for 17.58% of the Market Vectors Gold Miners ETF (GDX).
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