Gold Moves Higher After Worse Than Expected GDP

Gold is popping back up to the all-important $900/oz level in reaction to a worse than expected Prelim GDP number from the U.S.  Investors are opting for risk-averse investments today, though not to the extent one would expect after such a negative data release.  The wild, unpredictable behavior of gold continues with investors uncertain which side of the trade to commit to.

Despite the high volatility, we do notice a gravitational pull towards $900/oz.  Gold’s behavior is not surprising due to the fact that $900/oz is such a highly psychological level.  A commitment either above or below represents investors taking sides on the issue of a global economic recovery.  A sub-900 performance indicates economic recovery, while 900+ signals more troubling times ahead.  Hence, the erratic behavior of the precious metal reflects the mixed investor sentiment prevalent in the marketplace.

Gold is presently wrestling with our 3^rd tier uptrend and downtrend lines.  Ultimately, the precious metal’s performance will likely depend on its negative correlation with U.S. equities.

Fundamentally we find resistances of $902.85/oz, $905.09/oz, $907.10/oz, $910.46/oz, and $913.15/oz.  To the downside, we see supports of $898.38/oz, $896.36/oz, $893.45/oz, $890.10/oz, and $887.41/oz. Gold is currently trading at $899.50/oz.

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