Gold Starts to Top Out After Incredible Run.

Gold is beginning to cool down following the amazing gold rush that took place in reaction to the RBA being the first central bank to raise rates following the beginning of the credit crisis. The AUD/USD took flight after the RBA’s decision in conjunction with much better than expected Aussie employment data. Breakouts in gold and the AUD/USD spurred a broad-based depreciation of the Dollar, only fueling gold’s bolt towards new record nominal highs. However, the psychological impact of the RBA’s monetary shock could start to wane since both the ECB and BoE kept their monetary policies unchanged today. The EUR/USD and GBP/USD still have to deal with a few technical barriers before participating more fully in the broad weakness of the Dollar. Attention will now turn to Q3 earnings season and the reaction of U.S. equities. Better than expected Q3 results would likely depreciate the Dollar further and help gold extend its breakout. Meanwhile, it seems gold will cool and consolidate as investors digest this week’s explosive movements. Technically speaking, we can’t place a downtrend line yet since we’re dealing with uncharted topside territory. However, we’ve laid a few downtrend lines to give an idea of support. It seems the $1050/oz level will play a psychological role for the time being. Regardless of current weakness, gold’s breakout to record highs sends a message of commitment to a longer-term uptrend in the precious metal. For the time being investors should keep an eye on the EUR/USD and GBP/USD and their interaction with their respective topside technical barriers should they be reached.

Present Price: $1052.45/oz

Resistances: $1053/oz, $1056.34/oz, $1058.54/oz.

Supports: $1049.24/oz, $1046.55/oz, $1042.63/oz, $1037.99/oz, $1035.54/oz.

Psychological: $1050/oz

Gold Sprints to New All-Time Highs

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

Gold Shines Amid Darkness Within Markets!!

After Friday's disappointing U.S. fundamentals, alongside instability overshadowing financial markets around the world, including stocks and commodities, we see precious metals stabilizing with general positivity. Gold was seen to enjoy the highest demand throughout last week despite of the decline seen along the week.

Gold managed to rise on Friday, where it closed at $1002.30 per ounce rising from 985.40; affected by demand helping it gain 0.24% after the decline it had witnessed. Instability and volatility across global financial markets and bearish movement for numerous equity indices and commodities last Friday pushed investors to look for other safer investments. Gold, for that, seemed to be the brightest metal of all after this pessimistic wave managed to overshadow financial markets, alongside the haziness surrounding the U.S. economy. Though the world’s largest economy has been providing signs of stability, yet the outlook does not look as strong as many hope and resuming growth remains to be surrounded with sluggish expectations.

Gold Pares Losses Following Disappointing Employment Data.

Gold is paring earlier losses, bouncing off of 9/29 lows and our 2nd tier uptrend line. Gold continues to hold strong above a key set of September lows despite the selloffs in the EUR/USD, GBP/USD, and USD/JPY. Furthermore, the S&P futures are finally experiencing the pullback analysts anticipated. The EUR/USD and GBP/USD are also trading above intraday lows, showing gold is tracking the Dollar more closely than equities as has been the norm throughout the economic downturn. Speaking of which, investors should recall that the EUR/USD has been the best correlation to track as far as gold is concerned. Coincidentally, we notice solid uptrend lines in both gold and the EUR/USD, whereas the Cable and USD/JPY have few near-term technical cushions. Therefore, gold should continue to be resilient should the market-wide pullback pick up momentum. However, there could come a breaking point in gold over time should its patience be tested. For the time being, gold has September 29th lows and our 1st and 2nd tier uptrend lines serving as technical cushions. Our 2nd tier uptrend line appears to carry more weight than our 1st tier. A failure of our 2nd tier could imply a rather quick pullback towards $975/oz. As for the topside, gold faces multiple downtrend lines, 9/30 highs, and of course the highly psychological $1000/oz level. While it’s wise to maintain a neutral outlook on gold trend-wise for the time being, the downtrend has a stronger case over the near-term considering the negative performance of the precious metals correlations.

Present Price: $995.45/oz

Resistances: $997.20/oz, $999.16/oz, $1001.13/oz, $1003.62/oz, $1006.12/oz, $1009.15/oz

Supports: $995.06/oz,$992.92/oz, $990.96/oz, $988.82/oz, $986.96/oz, $984.99/oz

Psychological: $1000/oz

GOLD: Still Targeting The 1,024.00 Level.

GOLD: Although Gold is now backing off higher prices following its price halt at 985.10 and subsequent recovery higher, it continues to retain its overall medium term uptrends. With that said, the commodity has to now close back above its minor resistance at the 1,009.60 level to resume the mentioned recovery and open up upside risk towards the 1,024 level, its YTD high. Beyond the latter will create scope for a push towards its 2008 high at 1,030.85 with a break of there resuming its longer term uptrend targeting the 1,050 level initially and then the 1,100 level. Immediate support lies at the 985.10 level, its Sept 29’09 high with a clean break and hold below that level pushing Gold further to the downside towards the 969.90 level, its MT rising trendline. We envisage that the trendline will provide and cap declines if seen but a violation of there will expose the 930.03 level, representing its Aug 16’09 low. On the whole, our bias on Gold remains to the upside in the medium to longer term suggesting that its current price action remains corrective.

Gold Consolidates Around $1000/oz.

Gold continues its consolidation around the highly psychological $1000/oz level. A more protracted decline in gold was avoided this week after a sizable depreciation of the Dollar against both the Euro and the Pound over the last couple sessions. However, we maintain our negative trend outlooks on these major Dollar crosses for the time being, meaning a downward pressure in gold persists. We’re witnessing a battle of the bulls and the bears across the marketplace, highlighted by gold’s fluctuation around $1000/oz. While it seems the downtrend is gaining traction in major Dollar pairs, the bulls continue to keep the S&P’s head above water amid mixed global economic data and a pickup in M&A activity. The strength in U.S. equities is the counterbalance against a strengthening Dollar, holding gold above 9/10 lows and our multiple uptrend lines. However, a significant deterioration in U.S. equities would likely exacerbate the Dollar’s near-term broad-based appreciation and drop gold beneath key technicals. On the other hand, resilient U.S. equities could help turn the FX markets and allow gold to continue its march towards 2008 highs. We maintain our neutral outlook on gold trend-wise due since the precious metal is sitting at a crossroads. That being said, we believe there is ultimately a negative inclination in the gold since the technicals in the major Dollar crosses have deteriorated greatly. Meanwhile, 9/29 and 9/10 lows should serve as reliable technical cushions for gold along with our multiple uptrend lines. As for the topside, gold faces formidable resistances in our multiple downtrend lines and the highly psychological $1000/oz level.

Present Price: $996.60/oz

Resistances: $997.20/oz, $999.16/oz, $1001.13/oz, $1003.62/oz, $1006.12/oz, $1009.15/oz

Supports: $995.06/oz, $995.06/oz, $992.92/oz, $990.96/oz, $988.82/oz, $987.03/oz, $985.07/oz

Psychological: $1000/oz

Gold Consolidates Beneath $1000/oz.

Gold is balancing above 9/10 lows and June 2009 highs, yet remains below the psychological $1000/oz level. Gold appears to be taking its cue more from the performance of the EUR/USD and U.S. equities, which are trading the bottom of their near-term uptrend zones. However, rapid deteriorations of both the GBP/USD and USD/JPY are certainly causes for concern. Since the large pullbacks in the Dollar crosses are predominantly based on psychological factors, gold’s correlation is favoring the more fundamentally-based performances of the EUR/USD and U.S. equities. Hence, gold has managed to stay within range of the $1000/oz level despite recent volatility in the FX market. As a result, gold’s near-term performance will likely depend upon the results of key U.S. economic data this week. If global economic data continues to underperform gold may be forced to sacrifice 9/10 lows. That being said, we’re a bit skeptical about upcoming data releases. Therefore, we believe gold has a downward inclination over the near-term.

Investors should keep eye key technical supports of both the EUR/USD and the S&P futures. A technically significant decline in either of these investment vehicles would likely be accompanied by a large selloff in gold. Intraday and 9/10 lows should serve as reliable technical cushions for gold along with our 3 uptrend lines. As for the topside, gold faces formidable resistances in our multiple downtrend lines and the highly psychological $1000/oz level. We maintain our neutral outlook on gold trend-wise due to the mixed picture across the marketplace.

Present Price: $992.15/oz

Resistances: $993.14/oz, $995.13/oz, $997.20/oz, $998.94/oz, $1000.39/oz, $1003.44/oz

Supports: $993.14/oz, $990.96/oz, $988.78/oz, $987.03/oz, $985.25/oz, $982.93/oz, $980.61/oz

Psychological: $1000/oz