Is the dollar starting to outshine gold as a safe-haven asset?

The medium-to-longer term outlook for the precious metal remains bearish

Lukman Otunuga, OpinionIndustry Expert
Lukman Otunuga is a research analyst at FXTM. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in the various factors affecting the currency and commodity markets. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance, where he studied corporate finance, mergers & acquisitions and the role of international financial institutions.

August 7, 2018

Gold was offered support in the form of a weaker dollar during Tuesday’s trading session with prices trading around $1215 as of writing.

While the precious metal could struggle higher in the near term if the dollar continues to weaken, the medium-to-longer term outlook for gold remains bearish.

It is becoming quite clear that the dollar is starting to outshine gold as a safe-haven asset while expectations of higher U.S. interest rates have translated to further pain for the zero-yielding metal.

With the bearish fundamentals behind the yellow metal’s depreciation well-aligned with the technical, further downside is certainly on the cards.

Focusing on the technical perspective, gold continues to fulfil the prerequisites of a bearish trend on the daily charts as there have been consistently lower lows and lower highs.

Sustained weakness below $1213 could invite a decline towards $1200.

Alternatively, a solid breakout and daily close above $1213 may trigger a rebound towards the $1224 lower high.

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