Gold is trading off 2009 highs after failing to close above $1070/oz on the 4-hour. Gold’s weakness comes despite strength in both the Euro and the Pound today. Meanwhile, the AUD/USD seems to be topping off in a sign that investors are locking in some profits. Therefore, it appears gold is finally setting a top despite how temporary it may be. Gold has been on a tear this month and it is healthy for the precious metal to be experiencing some profit taking and consolidation. However, investors should take note that the EUR/USD is separating itself from our key 3rd tire downtrend line and September highs. Therefore, the currency pair may be starting a new leg up even though it must deal with the psychological 1.50 level. Gold’s positive correlation with the EUR/USD should play a key role in determining the precious metal’s near-term path. Therefore, investors should eye the currency pair’s interaction with 1.50 should it be tested.
Speaking of psychological levels, gold and the S&P future are quickly approaching their respective 1100 levels. Additionally, the Cable is trading around 1.60 and the USD/JPY is fluctuating near 90. Therefore, the markets are reaching an important point concerning the continuation of the bull trend. Regardless, we have no reason to alter our positive outlook on gold trend-wise unless the FX markets experience a rapid appreciation of the Dollar. Meanwhile, gold’s movements for the rest of the week will rely upon the Dollar and its reaction to further Q3 earnings and U.S econ data. If these two fundamental elements continue to outperform, then gold has the ability to test $1100/oz fairly soon. As for the downside, gold has technical cushions in the form of multiple uptrend lines, 10/13 and 10/9 lows, and the psychological $1050/oz level.
Present Price: $1061.45/oz
Resistances: $1061.40/oz, $1065.45/oz, $1068.30/oz
Supports: $1058.54/oz, $1054.82/oz, $1052.80/oz, $1050.67/oz, $1048.60/oz, $1045.23/oz
Psychological: $1050/oz, $1075/oz, $1100/oz
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