The yellow metal has reached the highest level in six weeks, as the weaker dollar continues to provide crucial support. Gold is currently trading at $1263 per troy ounce, which is the highest level since the mid of June.
Gold is currently testing a key down trend line, which has been in place since July 2016. In the past one year, gold has made six separate attempts to break the trend line with no success so far. This week, the line is being tested for the seventh time and we believe that the likelihood of a success is very low. The reason behind the belief is the lack of inherent strength in the gold as of now.
In the past three weeks, the price of gold is up by 4.1 percent. A Large part of that came due to weakness in the dollar, which declined 2.6 percent for the above mentioned period. It is up by a little more than 1 percent against the euro. With equities rising steadily, there is little or no room for risk aversion demand at the moment.
We expect the gold price to reach as low as $1190 per troy ounce in the short-term if it fails to clear the resistance. As always, the risk-reward ratio remains excellent at a resistance line.
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