5 Reasons to fall gold towards 980/680 levels the upcoming months:
1- Lack of demand : Gold has been used widely in the electronics industry over the past years, especially in the microchip industry, such as computer processors, smart phones … etc … But recently, gold has been replaced by Silicon microchips because of the price difference, added to that , Electrical circuits-microchips- made of silicon less affected by obsolescence factors ,humidity, vibration and shock………. This is one of the strongest reasons that led to the decline in demand for gold …
2-Strong USD : President Obama said that the war against the Islamic state (ISIS), “Daash” in Syria and Iraq may continue to three years or more …. Selling weapon means recovery of the US economy, I strongly believe that the upward trend of the US dollar has not started yet !!!…new historical levels are in sight for the USD !!!!
3- China has destroyed gold prices recently : China is the largest gold reserves in the world, China is also world’s number one player who control gold prices, currently …. With the decline in demand of gold, China has flooded the market with gold , to decline, gold prices , in order to buy it at a cheap price…
4- ECB : I’m not sure about this : but I’ve heard recently , The European Central Bank may sell part of its gold reserves soon , probably the upcoming week(s) , month(s)….If this is true , more losses are likely !!!……”NO SMOKE WITHOUT FIRE ” !!
5- Technical Analysis : Monthly outlook in XAUUSD remains on the downside as long as resistance 1204 – Sept 2014 low – holds on a monthly closing basis , support comes at the 979 levels ( May 2009 high ) , a halt is strongly suggested , but losing this level on a monthly basis should open 864/681 levels where strong support is suggested .
On the upside , resistance comes at the 1204 levels , a clear break above this level on a monthly closing basis will suggest short term bottoming , If seen , focus will be on the 1289/1345 levels ahead of the 1392/1433 levels before the next fall.
In all , as long as resistance 1204 holds on a monthly closing basis , outlook in XAUUSD remains on the downside towards the 1044/979 levels ahead of the 864/681 levels , break of 1204 on a monthly basis will bring recovery towards the 1289/1345 levels ahead of the 1392/1433 levels before the next fall.
- As long as 1204 holds on a monthly closing basis , the XAUUSD remains very bearish with risk towards the 1044/979 levels ahead of the 864/681 levels.
- Above the 1204 levels will turn outlook neutral towards the 1289/1345 levels ahead of the 1392/1433 levels before the next fall.
- In the long term forecast the pair is bearish below 1433 levels , a clear break above the 1433 levels will open 1700 levels…
- Below 681 levels sooner or later will reach 261 levels , I think It’s not easy to happen !!!!!
- 2 or 3 monthly closing below 1204 levels should bring sudden fall below 1000 levels ?!!!
- What is the reason which may prevent gold from falling?!!!! at the moment ..NOTHING…but in the future things – circumstances – may change !!!
- In my opinion : If XAUUSD manages to fall below 1000 levels , most likely It will consolidate within 700-1000 levels for a long period of time !!!!
Update : “Weekly Chart”
According to weekly chart , the pair is in recovery mode , overbought zone is 1235/1257 levels , this level should contain rise from 1331 levels and bring fall resumption , below 1331 will open 1044/979 levels . On the upside , a clear break above 1257 will extend recovery towards the 1345 levels before the next possible fall….