Gold is continuing its charge above $1100/oz after both China and Japan’s economic data outperformed analyst expectations. In addition to positive data flows from the Far East, investors received a couple statements from Fed officials yesterday that further supported the outlook that the central bank will keep its loose monetary policy intact for the foreseeable future. The combination of these developments has resulted in Dollar weakness and topside movements in gold. Despite yesterday’s retracement to $1100/oz, gold has once again shown a preference for its incredible uptrend. Although another $1100/oz retracement may not be out of the question, gold’s topside separation is certainly encouraging for bulls. Meanwhile, investors should continue to keep an eye on the EUR/USD’s interaction with 1.50 as well as the AUD/USD’s ability to create some topside separation from its October highs. Gold has been more closely correlated with these two major Dollar crosses, meaning any significant movements would likely impact the precious metal.
Technically speaking, the only topside barrier we’re able to form right now is intraday highs due to a lack of historical perspective. As for the downside, gold has several uptrend lines serving as technical supports along with 11/10 and 11/06 lows. Furthermore, the psychological $1100/oz level should continue to work in gold’s favor should it be tested again.
Present Price: $1116.25/oz
Resistances: $1117.87/oz
Supports: $1110.59/oz, $1107.50/oz, $1104.71/oz, $1100.41/oz, $1097.63/oz, $1093.33/oz
Psychological: $1100/oz.
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