FxWirePro: Gold likely to find sellers around $1230 area

As the US dollar continues to slide against its major trading counterparts on the hawkish outlook from many of the major central banks, the yellow metal has found some respite and recovered from $1205 per troy ounce earlier this week to $1223 per troy ounce as of today.

In mid-June, as the gold’s attempt to break a key resistance line around $1290 area failed, we recommended going short in gold with a target around $1225 per troy ounce. As the price target was reached, we initially recommended profit bookings but later revised that call by suggesting the gold price might decline further towards $1190 per troy ounce area and suggested that the profit booking call was premature.

As the gold price continues to face headwinds despite a weaker dollar, thanks to the forwarding march of equities, lack of safe have demands, and weaker inflation, we expect this recovery to be a short-lived one. We expect the gold price to face heavy selling pressure around $1230 area, from where it is likely to push lower in absence of a major risk aversion. $1230 area likely to present opportunities for re-entry or addition of short positions.