Gold suffers another losing week

Gold suffers another losing week

Gold suffered another losing week, falling 2.9% in its worst weekly performance since May 2017, as the geopolitical pressures produced by the financial crisis in Turkey kicked off last week. Some traders were caught off guard when the geopolitical issues caused a safe haven play for the U.S. dollar rather than gold.

That move was a double whammy for gold as it failed to benefit from safe haven demand, being also put under pressure by gains from its nemesis – the U.S. dollar.

After briefly tapping a 15-month high the U.S. dollar did soften somewhat on Friday, but gold’s reaction was quite muted, and over the weekend physical gold prices in Asia have been trending lower.

Gold has held above the supportive $1,178 level, which is positive for now, but if the U.S. dollar resumes its bullishness in the coming week we could see that level broken.

On the other hand, the relative strength index for gold is at its lowest level since July 2013, highlighting the extremely oversold nature of this market at the moment. That could give gold an upward boost, but only if the U.S. dollar softens and takes some pressure off gold.

In a far more bearish scenario it’s possible gold could turn sideways for several weeks, which would remove the oversold pressure, and leave the way clear for gold to drop to the December 2016 lows.

Sources: FXstreet.com, Kitco.com

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