Gold Could Test $1,000 if it Breaks Through Key Support Levels

Gold remains weak as it broke the key technical level of $1,180 due to a number of factors including the strength in the U.S. dollar and anticipation of the September FOMC meeting. Eric Zuccarelli, independent metals trader on the trading floor of the NYMEX, tells TheStreet’s Jill Malandrino the recent weakness in Chinese data and demand was the final catalyst to bring down gold along with most commodities. Should the Fed announce a rate hike on Thursday, Zuccarelli believes gold’s initial reaction will be to the downside, as well as the equity market, but an increase is an indication that the economy can stand on its own. Once the dust settles Zuccarelli sees equities moving higher because a lot of the anticipation could be priced in. Gold, however, could take out the recent lows in the $1,070-$1,080 range, and if it does, it could finally test the $1,000 level. Copper has been volatile as well in recent weeks as a result of weak demand in China, but Zuccarelli reminds investors that stimulus programs that were implemented earlier in the year are now starting to take effect, especially the Chinese power grids. In fact, Chinese copper imports have not abated.