FxWirePro: Maintain short positions in Gold as key level cleared

Earlier this month, we warned that gold price is likely to break to a new yearly low in April, and as expected gold has indeed broken into new yearly lows and currently trading at $1273 per troy ounce.

• The ongoing strength of the U.S. economy and strong USD are largely behind gold’s recent selloff.
• Moreover, lackluster demand from the investment sector has been another headache for the gold bulls. After a sizable increase in December and January (148 tons), investors have been reducing exposure to gold. In February, investors have sold 33 tons, while added only 3 tons in March. In April investors have been net sellers.
• The Commitment of Traders (CoT) also suggests a lack of bullish bias in gold. The long positions in gold declined more than 50,000 contracts in the week ending April 16th, which pushed the net long positions to just +56K contracts, the lowest level since December.

Trade idea:

• Calculations strongly suggest that the price of gold has further to decline. We expect gold to reach the following targets; $1257, $1234, and $1216 as we move through the year.