Gold price is in trouble. Yesterday, it dropped to a low of $1,820, which is the lowest it has been since July 20. And today, it is trading at $1,831, which is 11% below its YTD high of $2,075. Silver price is also under pressure, down by 0.50% today.
There are two primary reasons why gold price is struggling. First, the recent developments on a Covid vaccine has been bad news for gold and other safe havens, including the US dollar. That’s because gold is mostly seen as a hedge against risks in the market. As such, with a Covid vaccine, investors have started pricing-in a situation with fewer lockdowns and higher interest rates.
Second, the price of gold is struggling because of Bitcoin and other digital currencies. In the past week, all major cryptocurrencies have rallied by more than 10% leading to rotation from gold. Today, Bitcoin is trading at $18,435 while Ethereum and Ripple have surged to $610 and $0.71, respectively.
Gold and Bitcoin price divergence
Gold price technical outlook
In my report yesterday, I pointed that gold price would remain in a consolidation state before breaking lower to $1,800. In reality, the price managed to move below the lower support of $1,847 before settling at $1,820.
By breaking-out lower, it means that bears prevailed, which means that the price will likely continue falling. If it does that, the next level to watch will be $1,800 followed by $1,750. On the flip side, a move above $1,900 will invalidate that prediction.
Gold technical chart