(Kitco News) Gold price could continue to struggle under the weight of its worst enemy – the U.S. dollar – until an official taper announcement is made by the Federal Reserve, according to analysts.
After losing nearly $100 in August, gold will need some time to stabilize and find its new support levels.
“The technicals look awful for gold, but if prices could stabilize between $1,700 and $1,750, that might allow some longer-term investors to scale back in,” said OANDA senior market analyst Edward Moya.
“Gold’s worst enemy is a stronger dollar, and that might remain the theme until the Fed makes the formal taper announcement. Traditionally when the taper starts, it should be bullish for Treasuries and thus supportive for gold.”
In the short term, there are a lot of obstacles for gold to overcome, including more Fed speak, with markets paying extra attention to any more tapering hints. This might put a cap on any rebound rallies, said Commerzbank analyst Daniel Briesemann.
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