Gold Tries to Recover From $1100 Reversion

Gold dove back below its highly psychological $1100/oz level and set new March lows after a wave of risk aversion hit the FX markets. Investors fled to the Dollar after Fitch lowered Portugal’s credit rating. With Greece’s financial assistance plan still up in the air, another debt scare in the EU has accelerated Dollar flows in risk aversion, highlighted by large gains in the USD/JPY. Gold has reacted negatively to today’s development since the precious metal tends to have a negative correlation with the Greenback. However, downside movements in gold have been somewhat limited compared to the selloffs taking place in the EUR/USD and Cable. Gold has managed to regain its footing before a retest of February lows. However, we’ll have to see how the trading session progresses since problems in the EU could continue to benefit the Dollar. U.S. New Home Sales just printed below analyst expectations, which could help buoy gold and deflate the Dollar intraday since it works against speculation that the Fed will raise sooner than anticipated, a Dollar negative. We notice slight strength in the Cable and EUR/USD in reaction to the news, though we’ll see whether it has staying power. All eyes will be on the EU summit tomorrow, although expectations have been lowered by persistent rebuttals from Germany. The EU, UK and U.S. will also through in some data points, making tomorrow’s trading session a bit interesting.

Technically speaking, gold has intraday and February 2010 lows serving as technical cushions along with the psychological $1075/oz level should it be tested. As for the topside, gold faces multiple downtrend lines along with 2/25 and intraday highs. Meanwhile, the psychological $1100/oz level could continue to have an influence on gold as long as the precious metal remains within striking distance.

Present Price: $1092.50/oz
Resistances: $1093.37/oz, $1094.92/oz, $1096.18/oz, $1097.26/oz, $1098.10/oz, $1099.32/oz
Supports: $1092.23/oz, $1091.40/oz, $1089.78/oz, $1088.72/oz, $1086.90/oz
Psychological: $1100/oz, February lows

Gold Declines with Risk Aversion

Gold is pulling back slightly as risk aversion hits the FX markets. Greece has set up a showdown with Germany by giving the EU one week to come up with financial assistance measures before it heads to the IMF for help. Germany has been calling Greece’s bluff by publicly contemplating the possibility of Greece going to the IMF. However, Trichet recently stated that the ECB feels it would be unwise to go this route. In all, the increase in uncertainty has triggered a large selloff in the Euro which is weighing down on gold and leading investors towards the Dollar for safety. However, Gold’s intraday losses have been minimal thus far compared to the pullback in the EUR/USD. Therefore, it will be interesting to see whether the precious metal can continue to hold strong above 3/18 highs and avoid a more sizable downturn in the process. The data wire will be relatively quiet tomorrow, meaning attention could continue to be focused on the EU and any other psychological developments.

Technically speaking, gold faces multiple downtrend lines along with intraday, 3/16and 3/17 highs. As for the downside, gold still has multiple uptrend lines serving as technical cushions along with 3/18 lows and the highly psychological $1100/oz level should it be tested.

Present Price: $1120.20/oz

Resistances: $1120.40, $1121.84, $1122.65/oz, $1124.27/oz, $1125.63/oz, $1127.33/ oz

Supports: $1118.51/oz, $1117.66/oz, $1116.00/oz, $1114.53/oz, $1112.84/oz

Psychological: $1100/oz, $1150/oz, March highs and lows

Gold Yields Following Solid Pop

Gold experienced a solid rally yesterday as the precious metal’s negative correlation with the Dollar kicked back into 1st gear. The Cable, Aussie, and EUR/USD all experienced topside breakouts yesterday in the wake of the Fed’s decision to maintain its loose monetary policy stance for the foreseeable future. Yesterday’s return to the risk trade certain benefitted gold as the precious jumped from $1100/oz and peaked just above $1130/oz and our new 3rd tier downtrend line. Our 3rd tier runs through previous March highs, or the $1145/oz area. Hence, if gold can manage to break past our 3rd tier this could indicate more substantial near-term gains. Meanwhile, investors should keep an eye on the Greenback and monitor the ability of the risk trade to expand on yesterday’s gains. The Cable did break through some key downtrend lines and the Aussie is continuing its steady ascent, creating a favorable correlative environment for gold. Bernanke will testify before congress this afternoon, a potential market mover. Additionally, the U.S. will print a wave of data tomorrow. Hence, activity could pick back up this afternoon and during tomorrow’s U.S. session. Additionally, investors should keep an eye out for any more psychological developments hitting the wire regarding EU and UK fiscal problems since these headlines can jolt currencies as well.

Technically speaking, gold faces multiple downtrend lines along with intraday, 3/5and 3/3 highs. As for the downside, gold still has multiple uptrend lines serving as technical cushions along with intraday, 3/9, and 3/11 lows.

Present Price: $1123.20/oz

Resistances: $1124.29, $1125.52, $1127.77/oz, $1129.41/oz, $1131.05/oz, $1132.48/ oz

Supports: $1121.83/oz, $1120.39/oz, $1118.34/oz, $1116.70/oz, $1114.50/oz, $1112.81/oz

Psychological: $1100/oz, $1150/oz, March highs and lows

Gold Inclines As The U.S. Dollar Slides

The yellow metal surged on Friday as the U.S. dollar slumped against majors which enhanced demand on gold as an alternative investment.

Yesterday, gold gained $1.40 or 0.13% to close at $1109.32 an ounce. Gold Price was set in London on Thursday at $1106.00 per ounce during the PM fixing inclining from $1104.00 at the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, remained at 1,115.51 metric tons on March 11.

Today, gold prices climbed to $1113.44 an ounce after recording a high of $1114.00 and a low of $1107.80. The shiny metal took advantage of the dollar's fall and the oil's rally. The U.S. dollar plunged against a basket of major currencies as seen by the dollar index on the daily charts. The index dropped to 80.09 close to strong support at 80.07.

On the other hand, oil little changed today but still traded above $82 a barrel ahead of the release of retail sales and confidence in the U.S. Actually, gold gained in the previous period as a safe haven due to the escalating debt woes in Greece, but it may halt its advance as the problem eases. EU policy makers will meet Greek officials this week end and they might bailout Greece as announced this month by President Sarkozy.

Moreover, another downward pressure may come from the start of tightening of monetary measures by central banks all over the world. China's inflation rose yesterday to 16-month high and industrial production jumped to the highest in more than five years which is raising concerns the Chinese central bank would unwind stimulus faster than expected.

Gold lost more than seven percent since reaching its historical high in December last year and it is girding for its first weekly drop in four. With regard to other precious metals, platinum edged up to $1612.50 from the day's opening at $1609.20; palladium soared to $460.00 from $457.70; and silver inclined to $17.23 from $17.15, as of 08:55 GMT.

Gold Steadies As The Dollar Halts Its Rise For The Time Being

Gold steadied on Wednesday after the euro bounced slightly higher against the U.S. dollar though weaker oil prices could prompt new selling, traders said. Dealers noted early bargain hunting from Chinese speculators but gold prices were susceptible to sharp movements due to low volumes. Platinum and palladium slipped in early trade but held near recent highs. Gold was around 2 percent below a 6-1/2-week high near $1,150 hit in early March. Several attempts to revisit a lifetime high around $1,200 struck in early December were met by heavy profit taking but steady investor interest could lend Support. Gold is trading at $1,108 as of 21:20pm, GMT, with a bullish trend.

Gold Drops Amid Risk Aversion

Gold has tacked onto yesterday’s 1% pullback in reaction to a broad-based downturn in the risk trade. Hence, it seems gold is following its negative correlation with the Dollar once again. On the bright side, gold has avoided a retest of its highly psychological $1100/oz level and remains above the lower band of its trading range. Hence, the possibility of a return of gold’s upward momentum is not out of the question as investors lock in profits over the past couple trading sessions. Much will depend on the Dollar’s reaction to upcoming economic data releases from China over the next couple trading sessions. Strong Chinese data could favor the risk trade and send gold higher, whereas negative data could very well have the opposite effect. Meanwhile, it will be interesting to see of gold can stabilize above its highly psychological $1100/oz level. Additionally, our new 1st tier uptrend line could serve as a key support since it runs through February lows, or the $1090/oz area.

Technically speaking, we’ve formed two new makeshift downtrend lines running through 3/2 and 3/3 levels to give investors an idea of present resistance. Additionally, gold must face previous March highs and the psychological $1050/oz area to the topside. As for the downside, gold still has multiple uptrend lines serving as technical cushions, highlighted by our 1st tier as we mentioned before. Furthermore, gold has the psychological $1100/oz level working in its favor should it be tested.

Present Price: $1113.24/oz

Resistances: $1114.21/oz, $1116.63/oz, $1118.75/oz, $1121.05/ oz, $1123.03/oz, $1124.97/oz

Supports: $1112.11/oz, $1110.07/oz, $1107.26/oz, $1104.71/oz, $1101.73/oz, $1099.20/oz

Psychological: $1100/oz, $1150/oz, January Highs, March highs and Lows

Consolidation likely for gold.

Actually, gold is moving within very sensitive areas that represent 76.4% Fibonacci level for the downside rally from 1162.00 to 1044.00, while 1137.00 zones represent 127% from the BC leg of a suggested bearish harmonic AB=CD pattern. Therefore we believe that the metal could pullback to the downside during this week. A break of 1162.00 is able to damage this bearish anticipation and if that occurred, the pivotal resistance areas of 1185.00 could be retested easily. Stochastic and AROON support this negative scenario.

The trading range for this week is among the key support at 1095.00 and key resistance now at 1185.00.

The general trend is to the upside as far as 865.00 remains intact with targets at 1249.00.

Support: 1132.00, 1125.00, 1109.00, 1102.00, 1095.00
Resistance: 1144.00, 1151.00, 1155.00, 1162.00, 1176.00