Gold Price Down Dictated Dollar Appreciation

INDUSTRY.co.id - Jakarta - Gold mired despite the increasingly tense trading situation has raised vigilance in financial markets and among investors.

Lukman Otunuga, Research Analyst FXTM said the main factor affecting the decline in gold prices is the appreciation of the US Dollar.

"Gold is threatened to weaken further as the Dollar is likely to remain strong with bullish sentiment on the US economy and an increase in expectations of US interest rate hikes," he said in Jakarta, Wednesday (6/20/2010).

He said there was an argument that this precious metal could potentially bounce backed by trade tensions and geopolitical uncertainty, but the Dollar's appreciation could continue to hinder the rise in gold prices.

From the technical side, he added, gold remains depressed on the weekly time frame. If gold continues to weaken below $ 1280 then this can be an early indication that the bears return to power.

"The previous support levels around this level may turn into a dynamic resistance that paves the way to $ 1264," he said.