Gold Surges To $950/oz

Gold darted past $950/oz earlier this session on a rise in volume as the dollar depreciated against both the Pound and the Euro in a hurry.  However, the precious metal is pulling back a bit right now as investors lock in profits.  Therefore, it seems the psychological $950/oz could serve as an immediate-term technical breather as investors digest the bullish movements across the marketplace.  Neither the EUR/USD nor the GBP/USD registered a similar climb in volume from Friday’s levels on the 12:00 4-hour bar, meaning gold has some added interest this morning.

Gold is exercising its positive correlation with overall market sentiment, which is improving with 2^nd quarter earnings and the news that CIT (NYSE:CIT) will get a $3 Billion lifeline from bondholders.  Investors should also take into consideration the drop in TIC long-term purchases last week.  With Chinese reserves hitting all-time highs, the decline in the TIC could indicate China is diversifying its reserves into alternative investment vehicles, such as gold.

Meanwhile, gold is making a very bullish move, and it will be interesting to see if buy-side volume can follow through during the remainder of the trading session.  We’ve adjusted our trend lines to compensate for gold’s recent surge.  The new technical barriers to the upside are June 10 highs, the psychological $950/oz level, and our 1^st and 2^nd tier downtrend lines.  Meanwhile, gold has created an impressive support system, beginning with our 1^st and 2^nd tier uptrend lines.

Present Price: $951.45/oz

Resistances: $952.67/oz, $954.57/oz, $958.05/oz, $960.58/oz, $962.80/oz

Supports: $949.39/oz, $947.92/oz, $946.02/oz, $944.11/oz, $941.58/oz

Psychological: $950/oz

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