Gold has dropped back below its highly psychological $1200/oz after another set of encouraging U.S. employment data. Gold has reacted negatively to the positive U.S. news as the Dollar experiences broad-based strength and the S&P futures pop. The reversal in correlation between the Greenback and equities is the key story right now, and the positive correlation is having a negative impact on gold since the precious metal is normally positively correlated with the Dollar. Furthermore, gold has been overdue for a pullback following its incredible run. That being said, gold is still trading above December lows and our multiple uptrend lines. Therefore, gold’s uptrend is intact regardless of present weakness. However, investors should closely monitor the Dollar’s correlation with U.S. equities since a positive correlation between the two could result in further weakness in gold.
Meanwhile, investors should also eye the EUR/USD’s interaction with key supports should they be tested as well as the USD/JPY’s topside breakout. An extension of both trends could continue to have a negative impact on gold. Technically speaking, as we mentioned previously gold still has multiple uptrend lines serving as technical cushions along with 12/1, 11/30, and 11/27 lows and the psychological $1150/oz level. As for the topside, the psychological $1200/oz level may now serve as a topside barrier along with 12/2 and 12/3 highs.
Present Price: $1189.60/oz
Resistances: $1189.65/oz, $1194.94/oz, $1198.87/oz, $1202.74/oz, $1209.64/oz, $1216.59/oz
Supports: $1183.65/oz, $1180.14/oz, $1174.51/oz, $1168.38/oz, $1163.89/oz, $1157.76/oz
Psychological: $1200/oz, $1150/oz, 2009 Highs
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11 years ago
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