Gold retraces while the Dollar gains ground

Gold and the Dollar normally have a negative correlation due to the fact that gold is quoted in US Dollars in the international markets and when the Dollar rises, the demand for gold falls causing its price to drop as well. The recent drop on the Dollar and the rise in risk aversion has kept the precious metal in an uptrend until it reached a high around the 1295 level, very close to the 1300 level. Today, US Treasury Secretary, Steven Mnuchin has said that in the long term the strength of the US Dollar is a good thing due to its role as a global reserve currency. This has caused the Greenback to rally while gold retraces to the downside. On the daily chart of gold we can see that below today’s low at the 1284 level, its next support could be the 200 week EMA around the 1256 level. To the upside, in case the price of gold breaks above the 1300 level, it will practically have the road clear all the way to the high that it made around the 1336 level.