Gold could fall another $70: Technical analyst

Gold has fallen to its lowest level in more than three months, after suffering its most severe one-day drop since 2013. And the charts could suggest that more pain is ahead.

A stronger U.S. dollar, hitting its highest level in nearly two months, weighed on gold, coming as rising expectations of an Fed interest rates rise. The dollar index closed slightly higher Tuesday for its third positive session in four.

Rich Ross, head of technical analysis at Evercore ISI, sees gold falling even lower in the near future.

"I'd be a seller here of gold and miners," Ross said Tuesday on CNBC's "Power Lunch," pointing to a five-year chart of gold with its 100-week moving average.

The chart shows that the weekly moving average, which takes the average of gold's recent prices, now hovers around $1,204 — significantly below the $1,275 level at which gold finds itself on Wednesday morning

"The magnetic quality of that 100-week proves true here," Ross said, forecasting that gold falls closer to $1,200.

"We've seen a very slow and steady recovery in the economy; again, very slow, but still, that's not good for gold in the long run," Gina Sanchez, CEO of Chantico Global, said on "Power Lunch."

"We're probably seeing a lot of the enthusiasm over the dovishness of the Fed that got baked in over the last month simply coming out of the market."

Gold tends to perform well when it looks unlikely rates are set to rise, since higher yields make non-yielding gold look less attractive in comparison.


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