Huge Selling Seen in Gold Last Week, We Advice Gold Traders to Add Short Position in Gold Next Week

Gold is considered as safe heaven asset in the time of uncertainty, but decline that we have seen last week was just because of strength in US Dollar. We believe that USD will see more strength in the coming week. As in the bad times (recession) we always see major strength in USD. So this weakness in Gold was mainly due to strong US Dollar, the near term strength should be reason for weakness in commodities and global stock markets. Technical analysis says, the major support in Gold was broken, this support level was at 1700 zone and our short term strategy will to look for selling opportunities as long as Gold trades below 1700 level, on daily chart we see a support at 1540 level. So there is much more downside in gold now. All our entries in Gold can be timed on 1 hour chart using stochastic indicator. Even Indian stock markets were trading near their recent lows, this weakness is spread across the globe. Also one thing that we have noticed is MACD has given negative momentum on the histogram. So near term gold is more likely to weaken, hence our short positions on gold are valid. Traders must keep in mind that gold is still not a bubble as there is possibility that gold must move towards 2350 before the asset bubble bursts. So this decline is just a short term decline and the long term uptrend may continue further. For next week one can short gold near 1690 level with targets as 1655 and then 1633 levels. Stop loss orders must be placed above 1720 level.