Gold dumped in Asia, tests 61.8% Fibo level

Gold is being dumped in Asia after a minor technical recovery fell apart near $1190 levels on Thursday.

The yellow metal dropped to a low of $1170 and was last seen trading around $1172.07 (61.8% of Dec 2015 low - July 2016 high).

It’s ‘Trump Dump’ for gold

Expectations that Fed would be forced to hike rates at a faster pace in 2017 than previously thought is hurting the yellow metal. Moreover, the US President Elect Donald Trump is expected to pursue massive fiscal expansion policies that are likely to push inflation expectations higher.

Thus, the US dollar is on fire and is currently hovering at the highest level since early 2003 against the basket of currencies. The US stock markets are hovering at record highs, while the government bond yields are inching higher across the globe as well. Consequently, there is little incentive to hold the ‘zero yielding’ yellow metal.

Gold Technical Levels

On the daily chart, we see bearish 50-DMA and 200-DMA crossover. On the downside, a breach of support at $1172.07 (61.8% Fibo) would expose $1156.72 (Sep 24, 2015 high), under which the losses could be extended to $1116.86 (78.6% Fibo).

On the higher side, breach of $1180.60 (previous day’s low) would shift risk in favor of a rise to $1200 (zero figure). A violation there could yield a re-test of $1217.80 (Nov 18 low).