Gold Continues Avoids Retest of $1100/oz

Gold has managed to avoid a retest of the psychological $1100/oz level thus far. The precious metal is about where we left it on Friday as we witness consolidative patterns in the FX markets. Gold has been under quite a bit of selling pressure since the beginning of the month, so consolidation is a healthy technical development for the time being. That being said, the EUR/USD and GBP/USD are testing the patience of their uptrend by consolidating just above their respective key uptrend lines. Hence, another wave of Dollar strength could result in a sizable leg down in both currency pairs, meaning gold could follow suit considering its negative correlation to the Greenback. As a result, investors should keep an eye on the major Dollar crosses as we receive another set of key economic data from the U.S., EU, and Britain. The EU will release ZEW Economic Sentiment data followed by CPI and RPI figures from the UK. However, the spotlight could be on the U.S. since it will release its PPI, Empire Index, Industrial Production, TIC Long-Term Purchases, Capacity Utilization Rate, and Industrial Production. Should America’s econ data outperform once again it will be interesting to see whether the FX markets experience another wave of broad-based Dollar strength.

Technically speaking, gold has multiple uptrend lines serving as technical cushions along with 12/9, 11/13, and 11/10 lows. Furthermore, the psychological $1100/oz level could serve as a reliable technical support should it be tested. As for the topside, we’ve placed a downtrend line on our chart, albeit a steep one. Additionally, gold faces topside technical barriers in the form of 12/9 and 12/7 highs along with the psychological $1150/oz and $1175/oz levels.

Present Price: $1122.90oz

Resistances: $1123.03/oz, $1128.34/oz, $1134.47/oz, $1141.42/oz, $1147.54/oz, $1152.85/oz

Supports: $1115.27/oz, $1110.77/oz, $1105.05/oz, $1100.15/oz, $1097.29/oz, $1089.12/oz

Psychological: $1100/oz, $1150/oz, $1175/oz