Dollar to push gold lower

Gold has fallen victim of strong dollar, after strong bounce back last week and broke above $1224 resistance. Sellers have taken advantage of strong dollar and now has pushed prices lower than crucial $1200 mark.

Yellow metal is expected to go down further as dollar comes back sharply.

Why the yellow metal is out of favor?

Gold gets buoyed by the following factors.

• Risk aversion - When risk aversion reaches high it usually favors gold. Gold current environment with low interest rates and high level of monetary easing there is little or no evidence of risk aversion. Greek situation might not be enough for investors to flock to the safety of gold.

• Gold is a good hedge against inflation. However as of now, there are little inflationary risks to count for, not enough to provide the necessary push to gold.

Moreover stronger dollar leading to less appetite for gold as investment products. However upcoming days might turn out to be positive for gold as inflation and risk aversion is expected to pick over late this year and next year.

As of now Gold is likely to trade in its range of $1140-$1225. For now bias is towards downside. Gold is currently trading at $1195. Support lies at $1178.