By Fast Brokers – Gold has bounced from our 1st tier uptrend line and is battling with our 2nd tier downtrend line as we type. Gold managed to avoid a test of the psychological $900/oz level, and is strengthening on better than expected earnings from Alcoa coupled with an encouraging decline in weekly unemployment claims. However, gold’s pullback yesterday came on a large spike in volume compared to the relative calm of previous trading sessions. Additionally, we have yet to see any substantial volume to the upside today. Therefore, there remains considerable downward pressure on price with bears outnumbering bulls. We believe yesterday’s pullback in gold could have been a trend-setting statement with the precious metal tumbling beneath June lows. Ultimately, the fate of gold rests upon its positive correlation with U.S. equities. Should the S&P futures give into their downtrend, we would likely see a corresponding contraction in Gold. On the other hand, gold has the highly psychological $900/oz level to rely upon for near-term support. Additionally, we believe the $890-$990/oz zone would prove to be a worthy defense to the downside should the area be breached. In the meantime, investors should keep a close eye on volume and gold’s interaction with our 2nd tier downtrend and 1st tier uptrend lines.
Present Price: $915.40/oz
Resistances: $916.27/oz, $919.59/oz, $922.80/oz, $925.27/oz, $927.01/oz
Supports: $913.93/oz, $911.42/oz, $909.57/oz, $906.34/oz, $904.77/oz
Psychological: $900/oz
Market Commentary provided by Fast Brokers.
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