By Fast Brokers
Gold is topping out after making an incredible bull move on Friday. The precious metal seemed to have overextended itself by re-approaching the critical $1000/oz level rather quickly. Gold is now turning back from our 2nd tier downtrend line as volume falls off, a sign that bulls have overextended themselves. Gold continues to exert its strong positive correlation with crude and tends to serve as a leading indicator for U.S. equities. Investors are using it as a hedge for inflation as they exit the U.S. Dollar. Gold has made bull move after bull move on considerable volume during its present uptrend past $900/oz, making a retest of $1000/oz seem likely. There are 3 obstacles in the uptrend’s path, with the final test being $1000/oz. Our next two downtrend lines should prove to be power forces and act as consolidation zones. The 3rd tier downtrend line is critical since it connects through February 20, or 2009 highs. A strong, fundamental bull move through our 3rd tier on large volume could be an indication that $1000/+ may finally become a reality. The S&P futures have inched above their own yearly highs. Considering the positive correlation between the two investment vehicles, the pieces are falling into place for Gold’s uptrend. We maintain our bullish outlook trend wise for gold despite the upcoming challenges as the fundamentals and momentum remain in favor of the bulls.
Fundamentally we find resistances of $983.25/oz, $985.33/oz, $987.29/oz, $989.03/oz and $992.23/oz. To the downside, we see supports of $980.56/oz, $978.11/oz, $975.81/oz, $972.59/oz, and $970.35/oz. Gold is currently trading at $981.05/oz.
Market Commentary provided by Fast Brokers.
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