Gold price in danger zone not attracting bargain hunters

On Wednesday the gold price came under renewed pressure with April futures falling just over 1% to a day low of $1,147.70, before recovering to close at $1,150.60 a four-month low.

$1,150 an ounce is a crucial support level for the gold price – the metal has closed below this level on only two trading days since April 8, 2010.

Those sessions were November 5 and 6 last year before an unusual decoupling between the gold price and the US dollar occurred.

But with the greenback surging to fresh 13 year-highs against the world's major currencies on Wednesday, gold historic negative inverse relationship to the USD is pushing the metal into dangerous territory.

On the technical charts things aren't looking great either.

MarketWatch quotes Mark O’Byrne, director at GoldCore in Dublin, as saying "the strengthening dollar is important, but the poor technicals are also a key factor":

“The big question is whether support at $1,130 an ounce [for gold] holds or whether we retrench even further and test support at the 2008 level of resistance, which is $1,000 an ounce,” said O’Byrne. “A fall to this level will create a very attractive buying opportunity for those looking to buy on weakness.”

Recent price weakness appears not to be enough for precious metals bargain hunters to jump in with any vigour.

BullionVault quotes Mitsui Precious Metals' Hong Kong desk as saying "Physical buyers are responding to lower prices with fresh interest. However, momentum favours the downside in the short term":

"There is physical demand down here," agrees the London office of brokerage Marex Spectron, "but not enough to move us back up.

"The more likely scenario is further moves to the downside."

SEE ALSO: Rick Rule: Gold price 'could easily see $1,000'