Gold rallied from the July lows of $1077 to test the $1167 level. Gold is believed to be a safe haven where investors put their money during period of economic uncertainty. During the last economic recession, gold price rallied to over $1920. Unfortunately, this level has been the highest price since 2011. The introduction of Quantitative Easing by the FED in other to stimulate the economy has eventually put gold in a bear market.
The Market is anticipating a rate hike from the FED as soon as September. This is a bad news for gold bulls because this will have a negative impact on the price of gold. This means gold prices are more likely to go lower than we saw in July.
Market yesterday saw the biggest volatility so far in 2015, DOW dropped 1000Points and market saw a massive sell on USD and risk-off currencies appreciated massively. I was a little bit bothered about why there wasn’t any meaningful rally on the price of gold. Last week Friday, the market rallied to $1167 before market closed for the weekend. Gold prices opened on Monday for trading at $1164 and the high of the day was $1169. On a trading day when investors were so uncertain about the state of the world economy, I would have expected more money to flow into gold being a safe haven and price of gold to rally all the way to at least $1200 resistance level but price slide all the way down to daily low of $1145.
Technically it’s clear we are in a bear market and the rally to the upside was a confirmation a final leg down of price to less than a $1000. If price continues to trade below $1185, we can see prices at less than $1000 before the end of the year.