Figure: Daily chart for Gold
Gold had a positive session yesterday on the back of the long awaited weakness in the dollar. The dollar index corrected by close to 1 percent after being in strong uptrend over last many weeks. In the Asian morning session, gold is showing some weakness on the back of revival of dollar demand. It is important to know that gold and dollar share an inverse relationship. Traders and investors expect the Federal Reserve to hike short-term interest rates earlier than expected, which is positive for the dollar and therefore gold has been witnessing a selloff in the last couple of days.
Traders and investors are closely watching out for the release of the FOMC minutes on Wednesday, which might provide an indication of the future course of policy action in the near future. Traders would also be looking at key economic data to be released out of Europe to understand the underlying strength of the economy. Traders would be hoping for a revival of physical gold demand at lower levels from countries like China and India, historically considered to be the biggest consumers for the yellow metal.
On the daily charts for the Gold, the precious metal was able to reclaim the $1200 level, which is considered to be a psychological support. Traders and investors would be closely looking at $1214 level on the upside, as any move above the level might signal a reversal from the current downtrend. The momentum indicator for Gold is showing no signs of a reversal, which is a cause of concern indicative of the strong bearish momentum. The relative strength index is showing no signs of inherent strength.
Short Gold at current levels with a strict stop loss above $1214 for a short-term target at $1180
Long Gold if it closes above $1214 for short-term target of $1242