Gold Poised to Fall Lower on Improving US Economy
Current week has been tough for gold investors. Since Monday's opening price of $1,715 per pound, this precious metal has lost 3.5% or $60 of its value and currently trades at $1,655. In addition, the gold futures broke below its 50-day and 200-day moving averages, which is a bearish signal.
Traditionally, investors have been buying gold to hedge their portfolios against economical and political uncertainty or high inflation. However, strong economic data and the recent rally in the US equities has boosted investors' confidence and made gold a less attractive asset.
Also the Chinese economic data seems bearish for gold. The demand for gold in China has been one of the driving factors for higher gold prices, but the looming concerns of an economic slowdown in China are putting downward pressure on gold. On top of this India announced that it will double its customs duty on gold, which could hurt gold exports to India.
All these factors are signaling that gold could continue falling and test the support level around $1,600 per ounce. Investors who think that the price of gold is going to fall might want to take a look at ProShares UltraShort Gold ETF (NYSE: GLL) or PowerShares DB Gold Double Short ETN (NYSE: DZZ) for a higher risk investment.
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