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Why Gold Slipped Around 150 Pips and What’s Next

Posted Friday, March 22, 2019 by
Arslan Butt • 1 min read

GOLD has been incredibly volatile over the past few days. The surprising thing about gold is that you see it trading around $1,300 one moment and you will find it approximately at $1,320 another moment.

A day prior, gold fell dramatically from $1,320 to $1,301 after the European Union postponed the Brexit date until May 22 if the UK Prime Minister Theresa May could persuade legislators to support her withdrawal deal, or April 12 if she could not. Consequently, investors switched their investments from safe haven assets like gold to invest it in high yielding risky stock markets.

Besides this, the US Federal Reserve’s reassurance of a no rate hike policy in 2019 put the Greenback under selling pressure. For the time being, it triggered massive buying in gold, but logically fewer rate hikes are beneficial for the stock markets. The corporate sector can borrow loans at cheaper interest rates and the odds of expansion increases. As a result, investors move their investments in the stock markets to earn better profits. That’s why gold is highly receptive to interest rates. The negative correlation between gold and the stock market led to a more than 150 pip drop in gold prices.

What’s Next?

Once again, the yellow metal gold is trading bullish on the verge of retracement. Gold is supported above $1,306 along with resistance around $1,314 and $1,319.

I would consider staying bullish above $1,309 with a stop loss below $1,306 and take profit of around $1,314.

Good luck and trade with care!

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