Gold Stabilizes Around $950/oz

Gold ended with heavy losses on Friday backed by considerable volume.  The precious metal is suddenly trading beneath the $950/oz psychological level while trying to climb back above our 2^nd tier uptrend line.  Gold seems to be following the path of the Cable and EUR/USD, Friday’s large volume is certainly disconcerting.  With the Dollar re-appreciating, investors are exiting gold as it turns into a less-attractive hedge.  However, as with the aforementioned currencies, gold’s medium-term uptrend is damaged but alive.  Volume is dying off, meaning a near-term bottom could be put in place.  Hence, bulls shouldn’t get too discouraged yet.  An immediate-term key will be holding $950/oz and 5/28 lows.  These lows are also a key area for the EUR/USD, so investors should keep a close eye on this currency pair as well.

On the negative side, it does seem the present pullback could have legs.  The Dollar saw some large interest across the board with Geithner and Bernanke voicing their defense of the greenback.  Therefore, if the near-term appreciation of the Dollar should continue gold may be inclined to make a more significant retracement.  Meanwhile, a retest of $1000/oz has quickly become a memory, a negative development psychologically.  As a result, we maintain our negative outlook on gold trend-wise even though we maintain our medium-term bullish stance.  Keep an eye on volume, for if it continues to decline we could see a pop in the precious metal.

Fundamentally we find resistances of $951.79/oz, $954.32/oz, $957.11/oz, $960.47/oz, and $963.45/oz.  To the downside, we see supports of $946.21/oz, $943.68/oz, $940.13/oz, $937.85/oz, and $935.31/oz. Gold is currently trading at $949.75/oz.

Subscribe by RSS Subscribe by Email