Gold has bolted to new all-time highs after the RBA unexpectedly raised its benchmark rate by 25 basis points. The RBA’s decision has resulted in a broad-based depreciation of the Dollar, particularly against the Aussie and Kiwi. The concept of the RBA beginning its exit-strategy has sent a shock throughout the FX market, allowing gold to break free of its month long consolidation. Gold blew past all of our downtrend lines, the psychological $1000/oz level and previous all-time highs. This is clearly a bullish movement for gold in regards to the precious metal’s longer-term outlook. Despite the broad-based depreciation of the Dollar coupled with a breakout in gold the EUR/USD and GBP/USD aren’t participating fully. Investors are waiting for the ECB and BoE meetings on Thursday. Since gold has been closely correlated with the EUR/USD, the currency pair’s reluctance of to break out of its own September highs could temper further gains in gold over the near-term. However, full participation by the EUR/USD would only accelerate gold’s present upward momentum. Gold’s current movements are so decisive that it’s irresponsible to place any resistances and supports on gold’s chart until the precious metal calms and forms a new base. However, the psychological 1050 level could carry some weight should it be tested. Meanwhile, investors should keep a close eye on the broad-based performance of the Dollar since it is more responsible for gold’s movements than U.S. equities.
Present Price: $1039.20/oz
Resistances: $1050/oz
Supports:
Psychological: $1050/oz
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