Gold Consolidates Around $1000/oz.

Gold continues its consolidation around the highly psychological $1000/oz level. A more protracted decline in gold was avoided this week after a sizable depreciation of the Dollar against both the Euro and the Pound over the last couple sessions. However, we maintain our negative trend outlooks on these major Dollar crosses for the time being, meaning a downward pressure in gold persists. We’re witnessing a battle of the bulls and the bears across the marketplace, highlighted by gold’s fluctuation around $1000/oz. While it seems the downtrend is gaining traction in major Dollar pairs, the bulls continue to keep the S&P’s head above water amid mixed global economic data and a pickup in M&A activity. The strength in U.S. equities is the counterbalance against a strengthening Dollar, holding gold above 9/10 lows and our multiple uptrend lines. However, a significant deterioration in U.S. equities would likely exacerbate the Dollar’s near-term broad-based appreciation and drop gold beneath key technicals. On the other hand, resilient U.S. equities could help turn the FX markets and allow gold to continue its march towards 2008 highs. We maintain our neutral outlook on gold trend-wise due since the precious metal is sitting at a crossroads. That being said, we believe there is ultimately a negative inclination in the gold since the technicals in the major Dollar crosses have deteriorated greatly. Meanwhile, 9/29 and 9/10 lows should serve as reliable technical cushions for gold along with our multiple uptrend lines. As for the topside, gold faces formidable resistances in our multiple downtrend lines and the highly psychological $1000/oz level.

Present Price: $996.60/oz

Resistances: $997.20/oz, $999.16/oz, $1001.13/oz, $1003.62/oz, $1006.12/oz, $1009.15/oz

Supports: $995.06/oz, $995.06/oz, $992.92/oz, $990.96/oz, $988.82/oz, $987.03/oz, $985.07/oz

Psychological: $1000/oz

Gold Consolidates Beneath $1000/oz.

Gold is balancing above 9/10 lows and June 2009 highs, yet remains below the psychological $1000/oz level. Gold appears to be taking its cue more from the performance of the EUR/USD and U.S. equities, which are trading the bottom of their near-term uptrend zones. However, rapid deteriorations of both the GBP/USD and USD/JPY are certainly causes for concern. Since the large pullbacks in the Dollar crosses are predominantly based on psychological factors, gold’s correlation is favoring the more fundamentally-based performances of the EUR/USD and U.S. equities. Hence, gold has managed to stay within range of the $1000/oz level despite recent volatility in the FX market. As a result, gold’s near-term performance will likely depend upon the results of key U.S. economic data this week. If global economic data continues to underperform gold may be forced to sacrifice 9/10 lows. That being said, we’re a bit skeptical about upcoming data releases. Therefore, we believe gold has a downward inclination over the near-term.

Investors should keep eye key technical supports of both the EUR/USD and the S&P futures. A technically significant decline in either of these investment vehicles would likely be accompanied by a large selloff in gold. Intraday and 9/10 lows should serve as reliable technical cushions for gold along with our 3 uptrend lines. As for the topside, gold faces formidable resistances in our multiple downtrend lines and the highly psychological $1000/oz level. We maintain our neutral outlook on gold trend-wise due to the mixed picture across the marketplace.

Present Price: $992.15/oz

Resistances: $993.14/oz, $995.13/oz, $997.20/oz, $998.94/oz, $1000.39/oz, $1003.44/oz

Supports: $993.14/oz, $990.96/oz, $988.78/oz, $987.03/oz, $985.25/oz, $982.93/oz, $980.61/oz

Psychological: $1000/oz

Gold Drops like a Rock to $1000/oz.

Gold failed to get back above previous September highs once again, and is experiencing a large bar down on heightened sell-side volume. The retracement in gold comes in reaction to the collapse of the GBP/USD in addition to a broad-based appreciation of the Dollar. The positive Dollar flows are in reaction to weaker than expected U.S. Existing Home Sales and German Ifo Business Climate data. Additionally, BoE Governor King didn’t wait long to reignite dovish fears, and crude has gotten hammered beneath our important 1st tier uptrend line. The combination of negative events are leading investors away from risk and towards the Dollar, dragging gold down due to its negative correlation with the Greenback. While the Cable and crude have sacrificed their 1st tier uptrend lines, the EUR/USD and the S&P futures are holding strong above their own 1st tiers. However, a full commitment to the downside would likely force a larger pullback in gold. Therefore, the medium-term uptrend is facing its first considerable challenge in quite some time. Hence, investors should keep an eye on gold’s 1st tier uptrend line since it runs through 9/10 lows. A retracement below our 1st tier uptrend line would likely result in a more protracted selloff. Even though gold’s uptrend is still intact, we are initiating a neutral stance until we see how these various interactions with 1st tier uptrend lines pans out. Meanwhile, tomorrow’s wave of U.S. economic data should help determine whether the broad-based downturn accelerates are moderates.

Present Price: $997.95/oz

Resistances: $998.94/oz, $1000.39/oz, $10002.93/oz, $1004.75/oz, $1007.11/oz

Supports: $996.58/oz, $995.13/oz, $993.14/oz, $991.68/oz, $998.78/oz, $986.97/oz

Psychological: $1000/oz

Gold Weakens with a Stronger Dollar.

Gold failed to breach September highs yesterday, and the precious metal is declining as investors snap up the Dollar. Investors are presently making a slight retreat from risk as they await the Fed’s monetary policy decision later today. While we expect the Fed to keep its policy unchanged, the potential for a monetary shock always exists. Meanwhile, the EU’s PMI data came in negatively mixed today, catching investors a bit off-guard. The disappointing data has resulted in a comparatively weak Euro. Underperformance in the Euro is dragging gold lower since the precious metal has recently experienced a stronger positive correlation with the EUR/USD than the GBP/USD. The S&P futures are hovering around even, and gold will likely remain within a reasonable trading range until the Fed announces its decision. We maintain our positive outlook on gold trend-wise since we are optimistic about the precious metal’s correlations over the near-term. Additionally, gold has given us little reason to question the uptrend’s technical strength.

Technically speaking, gold’s psychological $1000/oz area should continue to serve as a strong support. Gold’s continual defense of $1000/oz is a positive sign for the uptrend since the precious metal is building a solid technical base. Gold has multiple uptrend lines along with 9/21, 9/15, and 9/10 lows serving as technical cushions. As for the topside, gold is staring down previous 2009 highs and our relatively flat 3rd tier downtrend line. Beyond these technical barriers, gold faces the final frontier in March 2008 highs. These technical levels are the only foreseeable obstacles separating gold from more exciting near-term gains. However, gold will need a strong push to the topside backed by healthy volume. Therefore, the precious metal will require participation from its correlations across the board.

Present Price: $1011.55/oz

Resistances: $1014.88/oz, $1016.56/oz, $1018.24/oz, $1019.79/oz, $1020.86/oz, $1024.48/oz

Supports: $1011.51/oz, $1010.39/oz, $1008.52/oz, $1007.21/oz, $1005.72/oz

Psychological: $1000/oz, 2009 highs and March 2008 highs

Gold rebounds!

Initially we saw a sharp sell off in the gold market with a breach below the closely watched $1000.00 mark reaching an intraday low of $995.40/oz. The decline was supported by a stronger US dollar which continued its previous day rebound. Participants appeared to be in a mood of booking profits thus exacerbating the downward move once the equity markets were also on the defence. However, later on gold recouped most of its losses closing $2.85 down for the day but still into four digits territory as the greenback pared a big chunk of its gains.

Consolidation likely for gold.

Gold is holding steady around the highly psychological $1000/oz level; experiencing some weakness on declining volume as investors nibble on an oversold Dollar. However, the precious metal has avoided a retest of September 10th lows thus far, indicating the pullback has been driven by profit-taking following gold's impressive run to new 2009 highs. We recognize tight resistances and supports, indicating gold should remain within a relatively narrow trading band due to the lack of global economic data. Investors are taking the opportunity to lock-in profits across the board as they await Wednesday's flood of economic data and central back meetings. We notice similar weakness in the EUR/USD, crude, and the S&P futures. However, all three are holding onto their technical supports, telling us continual consolidation may be in order for gold. After all, the $1000/oz level is highly psychological, and the precious metal will need a large jolt to break free. We have little reason to alter out positive outlook on gold trend-wise. Meanwhile, investors should keep a close eye on the behavior of gold's correlations for any indication of a substantial technical reversal.

One headline investors should take note of is the IMF's desire to auction off just over 400 tonnes of its gold reserves. China has taken interest in the offering with the nation seeking to diversify its massive reserve of Dollar-denominated assets. Though the huge sale of IMF gold has not been finalized, such a transaction would represent a large boost in overall supply and reduction in demand, thereby weighing down on price. China recognizes the price impact of such a move, and is requesting a substantial discount should it purchase the IMF's gold. Investors should monitor the situation closely since it could provide a sudden price shock to gold if the transaction goes through.

Technically speaking, gold's psychological $1000/oz area should continue to serve as a strong support. Our 2nd tier uptrend line represents an important technical cushion since it runs through September 10th lows. A failure of our 2nd tier could result in a sharp reversal. As for the topside, 9/11 and 9/17 highs serve as technical barriers along with our 3rd tier downtrend line.

Present Price: $999.75/oz

Resistances: $1002.91/oz, $1004.78/oz, $1007.21/oz, $1009.08/oz, $1010.39/oz

Supports: $998.61/oz, $995.06/oz, $993.19/oz, $992.07/oz, $989.08/oz, $987.02/oz
Psychological: $1000/oz, 2009 highs and March 2008 highs

Keep buying gold in these positions.

Gold hit a fresh record high of $1011.95 in early trading boosted by continued weakness in the US dollar which in turn posted another record low against the euro. The move was accentuated by additional buying power coming into the gold market with investors using the pullback as an opportunity to go long. That in turn was possibly based on growing concerns about whether the current level of the equity market can be sustained after the last few months' rally.

Buy gold on corrections.

Despite a tumbling US dollar which continued its nosedive, gold closed down yesterday closing below the $1000.00/oz mark. However, the move was largely interpreted as consolidation with some investors deciding to take profits after the rally seen in the last few days. Following a speech by G20 leaders saying the time for an exit strategy has not yet arrived the outlook for gold remains positive as concerns about inflation are back in focus. Silver has followed the gold lower despite a weaker greenback losing 27 cents to settle at $16.360/oz.

Healthy consolidation for gold today.

Gold finished slightly lower Friday on pre-weekend profit taking, catching its breath after a sharp increase since the conclusion of the FOMC meeting. Technically gold lost just 1.70 dollars so this limited profit taking combined with the fact that the 9 day moving average crossed above the 40 day moving average are good indications for the bulls. The move was interpreted as ‘rather a healthy consolidation' by some traders given that gold is expected to rise further due to inflation fears.

The short term trend is sideways while the medium and long term trends are bullish.

Support: $946.05 (Friday's low)

Resistance: $978.10 (high of 25/02/09)

Support: $931.50 (low of 26/02/09)

Resistance: $974.17 (high of 17/02/09)

Support: $929.60 (low of 06/03/09)

Resistance: $967.00 (Friday's high)

9 day moving average - $936.64
14 day moving average - $930.22
40 day moving average - $932.28

Sideways movement for gold.

Gold continued its rally yesterday supported by a weaker US dollar although the trading session was rather quiet because of US Labour Day. The gains are placing gold one step closer to the psychological important $1000.00/oz level which is likely to be tested in the near future. However some analysts pointed out that demand in India and the Middle East remains weak so the recent rise will need to get support from a strong investors' interest. Silver rose with gold posting another record high for the year at $16.370/oz and its outlook is even better given that the precious metals market still considers silver undervalued compared to gold.